Bears were beneficiaries from Obama’s lack of gusto for the Syrian war effort , which drove USD lower across the board, USD/SGD inclusive. Price hit a low of 1.272 yesterday based on this, continuing the bearish trend that has been in play since August 29th, catalyzed by the announcement that UK will not be joining in military action (if any) this time round.
It is interesting to note that USD/SGD has been locked in a channel since. Yesterday’s decline can also be interpreted as a rebound from Channel Top last Friday, with bearish objective being Channel Bottom. The fact that the rebound late yesterday which failed to break 1.274 support turned resistance is a good bearish signal. This morning’s rally that failed to do the same and is pressed lower by Channel Top once again adds further bearish winds for a push towards Channel bottom which is standing below 1.27 round figure currently. The fact that we’ve managed to reach a fresh 4 day low just an hour ago doesn’t hurt the bearish cause either, and suggest that current bearish momentum is still healthy and an eventual push below for even newer lows is possible.
The importance of 1.27 round figure can be seen from the Daily Chart. A break of the 1.27 opens up 1.26 as the next bearish target, which appears to be possible given that Stochastic readings still have some distance before hitting Oversold. However, the key level to break would still be 1.26 and preferably 1.255 as bears need to clear the 1.255 – 1.285 consolidation range in order to alleviate bullish pressure which has seen prices consistently printing higher lows and higher highs prior to the latest one. Assuming that 1.27 holds or was never even tested, prices may be able to climb back up towards 1.285 once more, but true bullishness can only be formed when the 1.285 is confidently broken, for a bullish extension of 1.30 round figure.
This may be possible considering that USD long-term trend is higher given that QE ending in 2014 is more or less a done and dusted affair. The immediate focus currently is on September’s FOMC decision which may or may not see the Fed implement some form of tapering or perhaps announce a proper tapering timeline. Depending on whether a tapering action actually materializes, USD will strengthen/weaken accordingly and hence dragging USD/SGD in either direction. That however is unlikely to change the long-term uptrend of USD/SGD especially since there is scarcely any bullish/bearish drivers coming out from the SGD front.
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