The US dollar index is at a critical juncture in the foreign exchange against the Singapore dollar and traders await the rate decision and key policy speech by Federal Reserve Chair Powell.
We could see the USDSGD showing an extended move in the direction of its current short-term trend after the Fed decision and especially if the Fed mentions and end the rate hike cycle.
The USDSGD pair could be a great proxy. The typical average daily trading range on USDSGD does not usually exceed 80-100 pips. However, when a large trending move does ensue on USDSGD it is a great indicator that the USD is going to make a huge move.
Additionally, when you see the USDSGD pair really trending in one direction and breaking key technical levels because it indicates genuine buying or selling interest taking place.
This could be for a variety of reasons, however, we can clearly see that the USD Index closely mirrors the USDSGD, so we can sometimes find clues on the USDSGD chart in regard to the US dollar trend.
Because of the stability of the country and relatively stable economic performance of Singapore. Thus, if the US dollar index is moving lower, some traders like to pile in Singapore dollars.
The sentiment is very bullish, meaning that there is a big one-way sentiment skew in place. At the moment, I do see the sentiment becoming a warning sign of more losses in the greenback.
According to the ActivTrader Market Sentiment tool some 12% of traders are bearish towards the USDSGD pair, which does strongly hint at any clear directional bias forming yet.
USDSGD Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDSGD pair has formed a higher highs and lower lows. These patterns are typically considered to be bullish.
According to the overall price trend it is very important that bulls hold the 1.3300 level in order to avoid a large price drop and a continuation towards the 1.3450 resistance zone.
USDSGD Medium-Term Technical Analysis
The daily time frame is showing that the USDSGD pair is forming a bullish bias above the Ichimoku Cloud.
We probably need to see the price capped above the 1.3300 area in order for the buy signal to be valid. Either way, whatever long-term direction the US dollar follows, so will USDSGD.