Singapore Dollar: Upside risk stays in focus against US Dollar – UOB

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann note that USD/SGD extended its overnight slide as the US Dollar (USD) sell-off pushed the pair back toward the 1.27 area. Short-term signals remain oversold, but they still see scope for further weakness toward 1.2695 and potentially 1.2670, while resistance is now marked at 1.2740 and 1.2770 over the coming days.

Dollar slide keeps downside pressure

"24-HOUR VIEW: In an abrupt move during the early NY session yesterday, USD plunged, reaching a low of 1.2708 before closing 0.59% lower at 1.2709. While the sharp decline appears to be excessive, there is no sign of stabilisation just yet. Today, as long as USD holds below 1.2740, it could drop further toward 1.2695. Given the deeply oversold conditions, a continued decline below this level appears unlikely. The next support at 1.2670 is also unlikely to come into view."

"1-3 WEEKS VIEW: We have held the view that the “risk for USD is on the downside” since early this month. In our most recent narrative from two days ago (18 Aug, spot at 1.2775), we highlighted that USD “could decline toward 1.2740.” We added, “the downside risk will remain intact as long as 1.2810 (‘strong resistance’ level) is not breached.” Yesterday, USD broke below 1.2740, plunging to a low of 1.2708. While the risk for USD remains on the downside, oversold conditions could slow the pace of any further decline. The next level to monitor is 1.2670. On the upside, the ‘strong resistance’ level is now at 1.2770."