Technical View
Price broke above the cloud and a new uptrend was established on April 23 of 2019. Two trading days ago, price had a Shooting Star candlestick pattern. This is a hint that the rally from the cloud breakout could be over and a decline lies ahead. Stochastic had also reached the overbought zone and is turning lower. However, MACD is bullish and its bullish trend is strong. MACD is hinting that the impending decline could be a corrective decline. As price is above the cloud and above the Base line, we are inclined to believe this is more likely to be a corrective decline and after this corrective decline, a rally will bring price to 1.3950 over the course of the next 3 months. Our target is based on the Ichimoku 3E price forecasting technique. We are calling for the corrective decline to halt around the Base line support and price support area around 1.3680 to 1.3670.
Fundamental View
Singapore economic outlook is weak as its trading partners are having weak economic outlook. Below is a list of Singapore’s top 15 trading partners. Its top trading partners China and Hong Kong, especially China is having a hard time, in a trade war with the U.S. A trade war between the world 2 largest economies is not going to help Singapore. Almost 25% of trades are with China and Hong Kong. A slowdown in China is likely to hurt Singapore.
Singapore electronic PMI has been in contraction for five consecutive months. That is not a good sign for the Singapore dollar.
Trade war is likely to lead to demand for safe haven US Treasuries. And you need to have US dollar if you want to buy US Treasuries.
Strategy
Going by technical and fundamental, we are recommending a buy USD against the SGD at 1.3680 for a price rally to 1.3950 with a stop below 1.3510