USD/SGD Eyes Two-Year High on Dollar Rally
USD/SGD is higher again on Monday, assisted by the US Dollar Index reaching the highest level since June 2002 on safe-haven buying.
The US dollar to Singapore dollar exchange rate is currently changing hands at 1.4060, the highest since mid-July. In the last month alone, the greenback has gained almost 3.00% against its Singaporean namesake. Subsequently, USD/SGD is up 4.25% year-to-date, and closing in on new highs.
The US dollar’s recent strength comes amid growing covid restrictions in China, and a worsening economic outlook in Europe. Subsequently, the dollar is seeing robust safe-haven flows from Europe and emerging markets.
A general risk-off tone has reemerged over the last week or so. Risk assets, including equities are re-pricing lower as the market digests a plethora of macroeconomic headwinds. Firstly, China is reimposing lockdowns at an alarming rate. Currently, more than 65 million Chinese are subject to some form of controls. Furthermore, Russian energy giant Gazprom has turned off the gas taps to Europe. The majority state-owned entity, announced that due to a leak it will close the Nordstream 1 pipeline indefinitely.
The pipeline closure will likely heap more stress on the continent as it struggles to contain rampant inflation. The lack of gas and oil flowing west from Russia is wreaking havoc on Europeans. Subsequently, money is flowing into the US dollar in droves. It’s this, that’s driving USD/SGD higher.
US Dollar to Sing Dollar Forecast
The daily chart shows that following a test of the 200-Day Moving Average (DMA), now at 1.3708 (red line), in May, USD/SGD has gone up in a straight line. As a result, the pair is comfortably above the 100-DMA at 1.3858 (blue) and the 50-DMA at 1.3905 (green).
With the major moving averages in the rear-view, the next technical resistance is seen at the July highs around 1.4100. Successful clearance of this level, clears a path towards the March 2020 pandemic high of 1.4647.
As long as the rate remains above the 50-DMA the outlook is positive — even more so above the July high. However, a close below the 50-DMA flips the view to neutral. Whereas a close below the 100-DMA is viewed as bearish.
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USD/SGD Price Chart
