SGD continue to strengthen against the Greenback following FX reserve data suggesting that MAS could be purchasing SGD on the side. USD/SGD traded below 1.24 during early US trading hours last night, though price recovered and attempted to break above the 1.24 round number once more before New York midday. The rally attempt failed and formed an Evening Star bearish candlestick pattern instead, pushing prices deeper below 1.24. This morning’s sell-off was sparked by higher anticipation that the Monetary Authority of Singapore (MAS) will maintain its tight policy stance in its April policy statement. The sell-off was fueled further by the record low USD/CNY fix placed by PBOC today, which eroded USD strength and add in more speculation that Asian Central Banks may keep their currency strong in this current season.
The sell-off allowed USD/SGD to break the rising trendline that has been in play since 2nd April. Price also broke 1.238 (5th Apr swing low) in quick succession, but found support around 1.237 (3rd April Swing low). Breakout opportunity still favor downside though, as rally above 1.238 would quickly face resistance in the form of the rising trendline. 1.237 is critical for a confirmation of the double top M shape pattern to pave the way for a stronger bearish push. Stochastic readings looks like it just begun a bullish cycle, though the cycle appear to have been cut short with an interim peak formed with the 1.238 rebound. Nonetheless, in the event of a bullish push above 1.238, it is not difficult to imagine Stoch readings finding resistance around 50.0 when price hits the rising trendline once again, similar to the peak in readings during the latest sell-off today.
Daily Chart remains undecided with Feb’s consolidation still in play. Failure to break away from the aforementioned consolidation zone with the latest bullish push puts initiative back to the side of bears. However, the ability of price to break below 1.235 remains unclear especially since Stochastic readings will most likely be within Oversold regions when 1.235 is being tested. Depending on how you look at it, current overall price action could be interpreted as bullish or bearish. The breakout from rising Channel suggest that bearish reversal has already been underway, with a Evening Star form just along the Channel Bottom when the breakout happened. However, uptrend from early Jan is not yet invalidated with 1.235 still holding strong. As such, price could simply play between 1.235 – 1.24 for the time being until something some strong news release force out a clear winner in direction.
Traders may not have to wait long though. The semi-annual policy statement will be released this Friday . The Macroeconomic Review release date has not been confirmed, but will definitely be released in the month of April, which means SGD will face 2 heavy news in the same number of weeks. The good news is that both news may help to determine price direction if they are congruent with each other, though the bad news is that disagreement between the 2 may result in yet more sideways trading, making long-term USD/SGD direction in doubt.