Near-Term Support Igniting More Bearish Speculation

The USD/SGD is consolidating near important support levels traversed this past Friday; and the current value of the currency pair is demonstrating bearish technical sentiment.

The USD/SGD is trading near the 1.32200 level as of this writing. On Friday of last week the USD/SGD touched the 1.31720 ratio, a level which had last been seen in early February. Since trading at highs of nearly 1.35625 on the 6th of July, the USD/SGD has correlated to the broad Forex market well. The current value of the USD/SGD is not only challenging mid-term support levels again, but has clearly demonstrated that selling sentiment has found momentum.

Financial institutions from late September of 2022 until the first couple of days in February of 2023 made the USD/SGD exceptionally bearish and its trend downwards was significant. Reversals higher from February until early July of this year were sometimes volatile, but the 1.35700 acted as rather durable resistance. The restart of selling pressure again in the USD/SGD has mirrored other major currencies that are trading against the USD; trading houses seem to believe the U.S Federal Reserve is nearing the conclusion of its aggressive interest rate hike policy.

The lack of another fast movement downwards in the USD/SGD the past day is a sign some caution has come into the marketplace. There is a possibility financial institutions believe the selling in the USD/SGD was strong and achieved a result which has brought it to a solid equilibrium which the currency pair may test over the near-term.

• The U.S Federal Reserve is expected to raise the Federal Funds Rate by another 0.25% on the 26th of July.
• Recent U.S data has shown that U.S inflation remains ‘sticky’, but may be showing some signs of a decrease in price pressures upwards.
• When the USD/SGD broke below the 1.33000 level last Thursday and sustained its price below the ratio with rather comfortable trading, this may have signaled to speculators the bearish trend in the Forex pair is legitimate.

The ability of the USD/SGD to dip below the 1.32000 level last Friday and test lower waters was interesting from a behavioral sentiment standpoint. Yes, the price of the USD/SGD did recover some upwards momentum, but the reversal higher has been rather polite and has not challenged resistance levels which would spark fear of a strong upwards attack coming. Traders who want to continue to look for downside price action in the USD/SGD cannot be blamed, but cautious day traders may want to use slight moves upwards to initiate selling positions based on the belief a retest of current support levels will continue.

Current Resistance: 1.32325

Current Support: 1.32125

High Target: 1.32485

Low Target: 1.31850

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