USD\/SGD eased as US Dollar momentum softened following core Personal Consumption Expenditures (PCE) Price Index data, leaving the pair trading around 1.2960. Bullish daily momentum remains in place, although the Relative Strength Index (RSI) has started to turn lower from near overbought territory. Market focus is on whether that shift extends or whether dip-buying returns.<\/p>\n\n
Price action may be influenced by quarter- and month-end flows. On the downside, support is seen at 1.2940 and 1.29, the latter marking the 61.8% fibo retracement of the December high to the 2026 low; additional support sits at 1.2840\/50, aligning with the 200 DMA and the 50% fibo. On the upside, resistance is flagged at 1.2980, corresponding to the 76.4% fibo, with a further cap around 1.3030.<\/p>\n\n—\n\n
We are seeing the USD\/SGD pair pull back to around the 1.2960 level as the US dollar’s recent rally loses some steam. This seems to be a reaction to the latest US inflation data which has tempered expectations for a more aggressive Federal Reserve. The main question for us now is whether this is a temporary dip or the start of a more significant downward move.<\/p>\n\n
The latest US core Personal Consumption Expenditures (PCE) price index, released this week, showed an annual increase of 2.7%, which has cooled the dollar’s ascent. At the same time, Singapore’s MAS Core Inflation for May was just reported at 3.0%, reinforcing our view that the Monetary Authority of Singapore will maintain its policy of gradual currency appreciation. This fundamental backdrop suggests there may be more strength in the Singapore dollar than the market has been pricing in.<\/p>\n\n—\n\n
Given this uncertainty, we believe using options is a prudent strategy for the next few weeks. We are looking at buying short-term put options with a strike near 1.2950 to hedge against a potential slide towards the major support at the 1.2900 level. This provides downside protection while limiting risk if the US dollar suddenly regains its strength.<\/p>\n\n
For traders who believe this is just a minor pullback, selling cash-secured puts with a strike price near the key 1.2900 support level could be an attractive way to collect premium. This strategy is profitable if USD\/SGD stays above this significant technical and psychological floor. It essentially pays us to wait and see if dip-buyers emerge as anticipated.<\/p>\n\n
We must remain cautious as we are at the end of the second quarter, a period which can distort normal trading patterns. Historically, we have observed significant repatriation flows into Singaporean dollars around this time, which can temporarily strengthen the SGD. This could unexpectedly push the pair down to test the 200-day moving average support around 1.2840.<\/p>\n\n
Therefore, we will be closely watching the 1.2980 resistance level; a decisive break above this would signal the uptrend is back in play. On the other hand, a failure to hold the 1.2940 support would indicate that a deeper correction is likely. Our immediate derivative strategies will be based on how the price reacts around these critical levels in the coming days.<\/p>\n\n\n\n