During early week, it has been noted that USD/JPY direction has an impact on USD/SGD due to the overflow of USD strength/weakness. Early week saw USD/JPY trading lower, which weighed USD/SGD lower. The opposite happened yesterday, with BOJ announcement sending USD/JPY to new heights, pulling USD/SGD higher this time round. However, despite a bullish move of >350 pips USD/SGD did not manage to break new highs., with price stalling at Monday highs before heading lower.
The spillover effect is still there though, as there wasn’t any SGD related news floating around during the period. Hence comparing the magnitude of USD/JPY movement, it is reasonable to expect a much stronger rally in USD/SGD. The failure of USD/SGD unable to break 1.2425 is testament to underlying SGD bullish sentiment, which will help USD/SGD to go down easily should USD weakness be seen.
From a technical standpoint via the daily chart, price has not looked back since the Evening Star breakout candlestick pattern observed during late March. Current push back towards 1.24 appears to be a short-term rebound just above the 1.235 Feb consolidation floor. Failure to even hold onto 1.24 will weigh heavily in bears favor for a retest of 1.235 and potentially lower objectives if 1.235 is broken. Stochastic readings are kinder to bulls, with readings still pointing to the upside. If price is able to push beyond 1.24 and above 1.245, preferably above the rising Channel, a continuation of the uptrend from Dec will be back in play.
Noting the recent weaker US employment numbers from ADP and Jobless Claims, a lower NFP figure can be reasonably expected. If tonight’s NFP figure turns out to be weak, USD may weaken due to speculative actions on continued Fed intervention, which will push USD/SGD lower given current bearish undertones. On the other hand, a surprisingly good NFP print may only serve to extend bullish run, but all that may come to naught, failing at resistances just as how the spillover of USD/JPY did not result in a new bullish landscape.
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