The Singapore dollar gained considerable strength against its US counterpart on Friday as an unemployment data miss sent the USDSGD tumbling. What does Monday’s action in the USDSGD tell about the reaction, and can it help us form a bias as the week matures?
Looking quickly to Friday’s action, the pair had consolidated ahead of the nonfarm payrolls release, forming something of a double top at weekly highs of 1.2647. The release missed expectations, reported at 192K versus a forecast of 200K, and the USDSGD fell to, and closed at, fresh weekly lows 1.2581. As the markets opened on Monday, the USD regained some of its lost strength, and a surge just ahead of the US morning open sees price consolidating just shy of previous support 1.2619.
An as expected Singaporean foreign USD reserves release on Monday morning drew a relatively muted reaction and, as such, this level now serves as in term resistance, and 1.2608 serves as in term support. With no real market movers scheduled for the rest of the day, the bias in the pair is purely technical. Look for a break above or below the aforementioned in term keys to gain insight into the day’s action.
A break below support at 1.2608 would hint at a resumption of Friday’s bearish momentum, and some Singapore dollar strength. Such a break would offer up an initial downside target at 1.2588 and beyond that, look to a secondary target of Friday support at 1.2581.
Conversely, a break above 1.2619 resistance would suggest the bulls may remain in control as the US markets open, and would indicate the potential for further USD strength. Look for the break to validate Friday support at 1.2632. A close above this level would offer up the neckline of Friday’s double top as a secondary target at 1.2638, and beyond that, weekly highs at 1.2647.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com