Singapore Dollar: Bearish bias against US Dollar - UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note USD/SGD surged to 1.2784 and closed at 1.2783, its largest one-day gain in three months, with strong momentum despite overbought conditions. Their Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) model suggests USD/SGD should trade between 1.2725 and 1.2785 intraday, while the 1-3 weeks view stays constructive as long as the pair holds above support at 1.2710.

Dollar strength tests key Singapore levels

"24-HOUR VIEW: While we held the view yesterday that USD “could edge higher,” we pointed out that “it remains to be seen if it can break above 1.2755.” However, during the NY session, USD rallied sharply to 1.2784 before posting its largest one-day gain in three months as it closed at 1.2783 (+0.42%). While strong momentum could outweigh the current deeply overbought conditions, it remains to be seen whether USD can reach 1.2800. Given the overbought conditions, the next resistance at 1.2835 is unlikely to come under threat. Support is at 1.2760; the next support at 1.2740 should hold for now."

"1-3 WEEKS VIEW: Tracking our positive view from last Friday, we highlighted two days ago (15 Sep, spot at 1.2700) that “the price action suggests that USD could continue to rise toward 1.2755.” Yesterday, we stated that “looking ahead, the next level to watch above 1.2755 is 1.2775.” We did not expect USD to clear both levels so easily, as it subsequently rallied to a high of 1.2784. The outlook for USD remains positive, and the levels to watch are 1.2800 and 1.2835. Overall, only a breach of 1.2710 (‘strong support’ level was at 1.2680 yesterday) would indicate that USD is not strengthening further. Near-term, 1.2740 is already a firm support level."