The US dollar has broken through Tuesday highs to offer up a bullish technical bias versus the its Singaporean counterpart on Wednesday.
Having started the day just shy of Tuesday support at 1.25841, the USDSGD is trading at 1.26070 heading into the US open. A purely technical perspective suggests there could be plenty more USD strength before the day closes, with the latest action breaking above the 200-period SMA for the first time since March 24. If the USDSGD can hold above 1.2605, look for an initial target of Monday highs at 1.2618. A close above this level would validate Friday resistance as a potential upside target at 1.2624.
A look at the stochastics reveals the pair is heading towards the overbought region, suggesting there may be a correction due before the aforementioned targets come in to play. In such a scenario, keep an eye on the 200 SMA and the central Bollinger initially. The combination of the two will likely offer up support enough to temper any short-term correction, assuming the bullish momentum remains with the pair.
A number of key releases are slated for the opening bell, with a surprise in any one having the potential to reverse the technical bias. From a US perspective, the headline release is the ADP nonfarm employment change. Consensus forecasts the figure at 195K, a rise on the previous release of 178K. In Singapore, the SIPMM Central Office is set to release the nation’s PMI data shortly after. Consensus forecasts the figure at 51.1, again a small rise on the previous release. A miss would offer up a bearish USDSGD bias, and a break below the 200 SMA would bring Tuesday support come resistance into play as an initial downside target. Beyond that, look for a break towards Tuesday lows at 1.2570.
All said, the headline data will likely spark some considerable volatility in the USDSGD as the day matures. Watch the key levels and be prepared to shift bias if price action suggests a reversal.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com