USD\/SGD edged higher as broad US Dollar strength combined with softer risk sentiment after a sell-off in tech and AI-linked equities. The pair was last at 1.2970, with daily momentum described as bullish and the Relative Strength Index in overbought territory. Near-term consolidation is expected near the top of the range, with resistance flagged at 1.2980 (76.4% fibo) and 1.3030, while support sits at 1.29 (61.8% fibo retracement of the December high to the 2026 low) and 1.2840\/50, where the 200 DMA aligns with the 50% fibo.<\/p>\n
Singapore\u2019s May inflation data printed below expectations: headline CPI was 1.8% year-on-year and core CPI 1.4% year-on-year, versus forecasts of 1.9% and 1.5% respectively. Higher food plus retail and other goods inflation was offset by lower services inflation, while domestic cost pressures were described as easing as services unit labour costs rise more slowly and consumer spending turns more cautious. With global energy prices cooling, the data reduce the urgency for MAS tightening at the July MPC if core inflation continues easing into 1H27, although higher US Treasury yields and a firmer USD may keep USD\/SGD supported.<\/p>\n
The US Dollar’s strength, fueled by last week’s robust US jobs report showing 210,000 new jobs added in May, is pushing USD\/SGD towards the key 1.3000 resistance level. While momentum is bullish, the overbought Relative Strength Index suggests this upward push may be losing steam, creating a tense consolidation phase. We are watching these technicals closely for signs of either a breakout or a reversal.<\/p>\n
We see a clear policy divergence solidifying between the US and Singapore, which supports a higher USD\/SGD. The recent US core PCE came in at a firm 2.9%, keeping pressure on the Fed to hold rates, while Singapore’s core inflation just printed a softer-than-expected 1.4%. This gives the Monetary Authority of Singapore little reason to tighten its policy stance at their upcoming July meeting.<\/p>\n
Given this backdrop, we believe purchasing USD\/SGD call options with strikes above 1.3000 for August expiration could be a prudent move. This strategy allows traders to profit from a potential breakout while capping downside risk. A bull call spread, perhaps buying the 1.3000 strike and selling the 1.3050 strike, could also lower the entry cost.<\/p>\n
The strong support around the 1.2900 level, which has held firm multiple times since March 2026, presents another opportunity. We see value in selling out-of-the-money puts with a strike price around 1.2850. This position collects premium and would profit if the pair stays above this level, which aligns with our view of a supported, not collapsing, pair.<\/p>\n
For those with existing Singapore-based asset exposure, the broader risk-off sentiment, highlighted by the recent 5% drop in the Nasdaq, poses a risk. We recommend using USD\/SGD forward contracts or options to hedge against further SGD weakness in the coming weeks. This can help protect the US dollar value of those portfolios if the greenback continues its rally.<\/p>\n\n\n\n