Singapore Dollar: Downside bias capped with 1.2705 against US Dollar – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note that USD/SGD has rebounded strongly, with short-term momentum pointing higher but key resistance at 1.2705 expected to limit gains. They now see an upside bias over the next one to three weeks, provided the pair holds above 1.2640, while the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) remains comfortably above its mid-point.

Upside bias but resistance still firm

"24-HOUR VIEW: Yesterday, we held the view that USD “is likely to range-trade between 1.2630 and 1.2655.” We did not expect USD to rise sharply to 1.2686. While strong momentum suggests there is room for USD to continue to rise, the major resistance at 1.2705 is likely out of reach for now. Note that there is another resistance level at 1.2695. Support is at 1.2670, followed by 1.2660."

"1-3 WEEKS VIEW: We have been holding a slightly negative USD stance since one week ago. In our most recent narrative from Tuesday (08 Sep, spot at 1.2655), we indicated that “the price action suggests that USD could gradually ease toward 1.2615.” After drifting lower for a few days, USD staged a strong rebound yesterday, breaking above our ‘strong resistance’ level at 1.2675 (high was 1.2686). Downward momentum has faded, and upward momentum is starting to build. While we expect USD to trade with an upside bias from here, it must clearly break above 1.2705 before a sustained rise is likely. To sustain the buildup in momentum, USD must hold above the ‘strong support’ level, now at 1.2640."