The USD/SGD currency pair is experiencing a slight decline as the strength of the US dollar wanes, with support found in the Japanese yen, Chinese yuan, and overall market risk sentiments. The latest trading position for USD/SGD is recorded at 1.3658. Analysts from a prominent financial institution predict that the Monetary Authority of Singapore (MAS) is likely to adopt a more accommodative policy stance in its upcoming Monetary Policy Committee meeting.
Traders are observing a potential rising wedge formation in the price movement, suggesting a possible bearish reversal. Daily momentum indicators indicate a mild bearish trend, with the Relative Strength Index (RSI) showing signs of divergence. In the near term, market conditions appear to favor a downside bias, albeit with low conviction behind these movements. Current support is seen at 1.3645, while resistance levels stand at 1.3760 and 1.38.
As the market looks ahead, attention will center on key economic indicators including the Non-Oil Domestic Exports (NODX) data due on Friday, the Consumer Price Index (CPI) scheduled for the following Thursday, and the MAS Monetary Policy Committee meeting, slated for no later than January 31. Expectations are that MAS will relax its policy slightly, adjusting the policy slope while still maintaining a moderate appreciation stance.
The ongoing progress in the disinflationary trend gives MAS the room to pursue a more flexible monetary policy, especially considering the time lag in policy transmission effects. Furthermore, the Singapore dollar nominal effective exchange rate was noted to be 0.59% above its model-implied midpoint, indicating an environment conducive to policy adjustments.
