OCBC said USD/SGD fell into the New York close on Friday, linked to a sharp drop in Brent and a pullback in USD/JPY. The moves eased near-term concerns about inflation and bond yields.
They described the fall as a relief-driven move rather than a full reversal. They said trading may stay two-way in the near term, with a preference to sell into rallies.
They noted geopolitical news remains changeable and may affect oil prices, inflation expectations, growth concerns, and risk sentiment. They said markets are watching US-Iran developments and whether USD/JPY has further room to decline.
USD/SGD was last near 1.2730. They said daily momentum and RSI did not show a clear direction.
They placed support at 1.2720 and 1.2680. They placed resistance around 1.2760 to 1.2770, with a higher level at 1.2850.
The recent dip in USD/SGD towards 1.2730 should be seen as temporary relief rather than a true reversal of the trend. This move was mainly driven by a pullback in Brent crude prices to around $85 a barrel and a slight easing in USD/JPY. The fundamental reasons for a strong US dollar, however, have not gone away.
Our bias remains to sell into any rallies, particularly as the pair approaches the resistance zone between 1.2760 and 1.2770. With the latest US inflation figures for April 2026 coming in at 3.5%, concerns about sticky prices persist, making it unlikely the Federal Reserve will change its hawkish tone. This underlying dynamic should provide support for the US dollar in the weeks ahead.
For those trading derivatives, this points towards buying put options as the USD/SGD exchange rate climbs towards that 1.2770 resistance area. This approach allows one to position for a subsequent move lower while clearly defining the upfront risk. A more significant resistance level, and another potential area for such trades, is located near 1.2850.
We must remain watchful of geopolitical news, as it can quickly affect oil prices and overall market sentiment. We remember how similar flare-ups in late 2025 caused the pair to spike sharply before retreating, validating the strategy of selling into strength. The current environment feels similar, where headline-driven rallies may not have lasting power.
While the primary strategy is to sell rallies, the neutral readings on daily momentum indicators suggest two-way trading is possible in the very near term. There may be chances to buy dips near the support level of 1.2720 for a quick trade. However, these should be considered short-term moves against the broader strategic view.
