The Singapore Dollar has tested important resistance early this morning as major shadows loom for speculators considering a trade of the USD/SGD.
If you enjoy speculative forex positions now is your opportunity to potentially enjoy a ride on a rollercoaster. The Singapore Dollar is an excellent barometer of international sentiment because of its geographical location and the secure place it has created in the world of commerce financially. The USD/SGD is testing important resistance in early this morning and traders with adventurous tendencies will find taking a position within the currency pair stimulating in the coming day.
After pushing aside important short term resistance the USD/SGD may find buyers attracted to higher targets near the 1.3990 juncture. Global risk sentiment is being tested as concerns about Coronavirus and world economies raise questions about what will follow mid-term. However, for a potentially more insight trading consideration, traders may want to contemplate the long term ramifications of what appears to be China’s move towards implementing further ‘security’ laws on Hong Kong to make sure it maintains order.
Interestingly, this move by China has been in the works the past few months as they have actively voted on laws which allow China to govern more efficiently over Hong Kong. Concerns in the financial arena may have sparked an effect on Singapore because of it nearby vicinity to Hong Kong and its potential as an alternative financial sphere to conduct business in Asia. So why is the Singapore Dollar losing value to the US Dollar in early trading this morning? It is possible this news has already been ‘baked into the cake’ by financial houses internationally and they positioned themselves accordingly months ago. Singapore banking corporations have denied they have seen an inflow of capital from Hong Kong, but it is likely they are being polite while trying to keep their relationship with China reasonable and tame.
From a technical viewpoint the USD/SGD did show signs of vulnerability last week and it was not a surprise that buying occurred in the forex pair after the Singapore Dollar showed a considerable amount of strength during the month of June. Much of the trading for the USD/SGD has been between 1.3860 and 1.3950 the past few weeks. At its current price levels the USD/SGD does have the flavor of a potentially good selling opportunity.
However, traders should be careful about risk adverse sentiment raising its ugly head. Yet, if a trader were to take a short position of the USD/SGD its opportunity does look enticing as long as stop losses are place near key resistance.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.3990
Current Support: 1.3890
High Target: 1.4000
Low Target: 1.3850
By Robert Petrucci
This blog post was originally published in dailyforex