The US Dollar has now risen for a fifth consecutive day against the Singapore Dollar, and UOB analysts Quek Ser Leang and Lee Sue Ann remain constructive on the USD/SGD pair. They acknowledge that the market has moved into overbought territory, yet they still see room for further Dollar strength. Over the immediate term, they expect a possible test of 1.2980, while 1.3000 stands as a firm cap on the upside.
The next 24 hours
According to the analysts, the Dollar climbed to a high of 1.2939 two days ago. When it was trading at 1.2935 the previous day, their read was that upward momentum had not picked up by much, though there was scope for the Dollar to edge higher toward 1.2950. They also judged that the major resistance at 1.2960 was unlikely to come into play. Their call for a higher Dollar proved correct, but they had not anticipated it grinding all the way up to a high of 1.2974.
Conditions, they note, are overbought and upward momentum remains lacklustre. Even so, as long as the Dollar holds above 1.2940, there is a chance for it to test 1.2980. This time, the next resistance at 1.3000 is unlikely to come into view.
The one to three week outlook
The analysts turned positive on the Dollar late last week. In their most recent note on Monday (22 June, spot at 1.2920), they flagged that the price action suggested the Dollar could rise toward 1.2960. The Dollar then pushed higher, cleared 1.2960 and printed a high of 1.2974. It closed up for the fifth straight session at 1.2969, a gain of 0.24%.
With the market already overbought, they would have preferred a more impulsive advance, but the overall price action still points to additional Dollar strength. The next technical target is 1.3000. They will keep their positive Dollar view intact as long as 1.2915 is not breached, with the strong support level sitting at 1.2890 the previous day.
What it means for traders
In short, UOB's read is clear: the Dollar's grip on the Singapore Dollar is firm, with attention fixed on the psychological 1.3000 level. On the downside, 1.2915 is the key support whose breach would undercut this bullish stance.
