The Singapore dollar’s strength looks set to fade after it lost momentum following its advance to the strongest in almost two years.
The US dollar appears poised to rally against the Singapore dollar toward its 200-day moving average, after the pair formed a potential bullish double bottom pattern in February. The currency pair started the year falling to its lowest level since April 2018, as the Singapore dollar rode the wave of risk appetite that was fueled by coronavirus vaccine optimism. However, support for the US dollar around its January low against the Singapore currency has continued to hold despite being retested.
The pair’s moving average convergence-divergence, a momentum indicator, signalled bearish momentum may be waning when it formed a higher low last month. It has now bullishly risen above both zero and its signal line. The US dollar/Singapore dollar cross is poised to test initial resistance at its 100-day moving average, a level that has capped it since May. A decisive close above the level would open the door for the pair to rise toward its 200-DMA, currently at 1.3568.
The US dollar is bouncing back as rising US yields and a pickup in the speed of the US vaccine rollout confound the consensus calls for a weaker greenback that dominated as 2021 opened. Market participants will be watching to see if Thursday’s speech by Federal Reserve Chairman Powell on the economy, and then US payroll data due Friday, add fuel to the greenback’s strength.
