Following Singapore’s negative GDP report for Q1 2020, the Singaporean dollar is holding up its ground well against the USD. As of this writing, USDSGD is down close to 40 pips from where it topped today at 1.4245.
It was reported earlier today that Singapore’s GDP contracted by 4.7% in the first three months of the year, reflecting the impact of the coronavirus on the economy. While this reading implies that the Asian economy is headed into a recession, actual number still beat the forecast which was for a 7.4% contraction.
USDSGD could also be facing downward pressure because of the Monetary Authority of Singapore’s (MAS) comments following the report. According to the monetary authority in charge of setting interest rates, the current policy remains appropriate despite the GDP report.
Download our Q2 Market Global Market Outlook
USDSGD has been making lower highs and higher lows since April 13. Consequently, a symmetrical triangle has formed on the 4-hour time frame. When you enroll to our free forex trading course, you will learn that this chart pattern is generally considered as a neutral indicator. That is, until the market breaks out.
If support at the 38.2% Fib level (drawing the Fibonacci retracement tool from the low of May 20 to the high of May 25), we could soon see USDSGD rally to the top of the triangle around 1.4255. If there are enough bulls in the market, the currency pair could close around its May 15 highs at 1.4269. Should this happen, resistance at the top of the triangle will have effectively been broken. It could then suggest that there is enough bullish momentum in the market for USDSGD to trade higher. The next ceiling to watch out for is at 1.4318 where the currency pair topped on April 21.
On the other hand, if support at the 38.2% Fib level does not hold, it could mean that there are still enough sellers in the market to push USDSGD lower. It could head on to support at the bottom of the triangle around 1.4115. If support at this price does not hold, the currency pair could fall further to 1.4052 where it bottomed on April 13.