Singapore Dollar: Upside risk stays in focus against US Dollar – UOB

FXStreet Insights Team FXStreet

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD rebounded after a sharper-than-expected drop to 1.2752, easing immediate downside pressure and pointing to intraday consolidation between 1.2760 and 1.2795. However, the 1–3 week view still sees the risk for the US Dollar (USD) on the downside, with scope for a move toward 1.2740 while resistance is capped near 1.2810.

Dollar seen consolidating before next leg

"24-HOUR VIEW: USD fell to a low of 1.2775 last Friday. When it was at 1.2790 in the early Asian session yesterday, we highlighted the following: “The slight increase in downward momentum is insufficient to indicate a continued decline. That said, there is a chance for USD to test 1.2775 again. The next support at 1.2765 is unlikely to come into view.” While our view that USD would decline was correct, we did not expect the sharp drop to a low of 1.2752. USD rebounded from the low to close 0.16% lower at 1.2778. The immediate downward pressure has eased with the rebound, and instead of continuing to decline today, USD is more likely to consolidate within a range of 1.2760/1.2795."

"1-3 WEEKS VIEW: We have maintained the view that “the risk for USD is on the downside” since early this month. In our most recent narrative from last Tuesday (11 Aug, spot at 1.2805), we highlighted that “while the price action continues to suggest downside risk, USD must break clearly below 1.2765 before a move to 1.2740 can be expected.” Yesterday, USD broke below 1.2765, dropping to a low of 1.2752 before rebounding to close at 1.2778 (-0.16%). While we would have preferred a close below 1.2765, the price action suggests that USD could decline toward 1.2740. The downside risk will remain intact as long as 1.2810 (‘strong resistance’ level was at 1.2840 yesterday) is not breached."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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FXStreet Insights Team

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