The USD/SGD Failed to Break the 1.4240 Mark
- The USD/SGD is facing strong resistance, the 1.4240 level
- Cheap loans to be offered to SME borrowers
- A shrink of 5.7% of Singapore’s GDP.
Monthly Time Frame:
The Singapore Dollar has been facing huge pressure from the US dollar since the beginning of 2018.
The dollar gained control and pushed the price by more than 12% in the last two years.
Now, this appreciation is facing a monthly resistance to the 1.4240 level (red horizontal line).
If the Singapore dollar gains power, the USD/SGD could be pushed downward, and a reversal might be seen in the future.
However, if the price succeeded to cross the strong resistance, and closes above it, there will be a huge probability that the USD/SGD resume its climb and start to record higher highs.
The 4hr chart will give traders an idea of how the price might move and help them know what’s happening near this monthly resistance.
4-Hr Time Frame:
Using the 4 Hr chart, it is clear that the price couldn’t close above the 1.4240 mark.
This indicates some uncertainty, and it may not mean that the price is destined to head downward. A false breakout might be established, and an upward movement could be seen again.
There is a considerable possibility that the price continues to shrink since the pair is traded below the 100 SMA, three bearing candlesticks are established, and the USD/SGD breached the white trendline.
The latest massive drop in the value of the Singapore Dollar is due to an easing of the monetary policy implemented by MAS (Monetary Authority of Singapore).
The country was forced to stimulate its economy similarly to other countries that were hit by the coronavirus.
The MAS will allow financial institutions to lend Singapore Dollars at an interest of 0.1 per cent per year and use these cheap credits to offer them to Small and medium-sized enterprises at near zero-funding cost.
“As of 27 April 2020, 12 pm, the Ministry of Health (MOH) has preliminarily confirmed an additional 799 cases of COVID-19 infection in Singapore, the vast majority of whom are Work Permit holders residing in foreign worker dormitories”.
The coronavirus cases are still on the rise in Singapore, which might delay the reopening of its economy.
An extension in the lockdown might leave severe losses in the Singapore economy, which will lead to a further appreciation of the USD/SGD in the coming days.