The USD/SGD pair is consolidating during the Asian session, holding steady at 1.3462 as traders await crucial US economic data. The focus tonight is on the ISM services PMI report, which is particularly noteworthy as the services sector has been a key driver of the US economy.
The report will provide critical clues about the health of the US economy.
Picture: USDSGD steady between 1.34 and 1.35, as observed on the VT Markets app.
The services PMI will be closely watched as a gauge of the US economic recovery. A strong reading could reinforce expectations of continued economic growth, potentially limiting the downside for the US dollar. Conversely, a weaker-than-expected reading could increase speculation about the Federal Reserve tilting more dovish, which would put pressure on the greenback.
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From a technical perspective, the USDSGD support level can be seen at 1.3400, while the resistance of the same currency pair hovers at 1.3500. Such stability suggests that traders are in a wait-and-see mode ahead of the upcoming data.
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Key economic indicators such as the ISM services PMI have had a large impact on currency pairs. A strong services PMI report in July 2020 helped boost the US dollar amid recovery hopes following the initial pandemic lockdowns. Similarly, in December 2018, a weaker services PMI report contributed to a broad sell-off in the dollar as fears of an economic slowdown increased.
The trajectory of USDSGD will depend on broader economic indicators and the monetary policy stance of the Federal Reserve. If the Fed signals a more dovish outlook in response to economic data, the US dollar could weaken further.
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