Singapore Dollar: Rebound seen relatively capped against US Dollar – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong note that USD/SGD has eased with the softer US Dollar (USD) and lower US yields, while Singapore’s import prices show strong energy-driven inflation. They retain a constructive medium-term view on the Singapore Dollar (SGD) but expect any USD/SGD pullback to stay shallow unless broader USD weakness deepens, with key support and resistance levels guiding near-term two-way trading.

Energy-driven inflation and range levels

"USD/SGD eased overnight, tracking the pullback in USD and US Treasury yields despite stronger-than-expected US GDP and still-elevated inflation. The mixed market response suggests that conviction on the next leg higher in USD remains limited, although resilient US activity and persistent price pressures may also continue to restrain USD declines."

"We retain a constructive medium-term SGD outlook, although scope for further trade-weighted outperformance may be limited with the S$NEER already trading in the upper half of the policy band. Near term, USD/SGD remains sensitive to USD, US Treasury yields and RMB developments. Any pullback in USD/SGD may remain relatively shallow in the interim unless we see a more meaningful decline in the broader USD."

"On the domestic front, Singapore’s September import prices rose 19.9% YoY, accelerating from 15.5% in August, largely driven by higher energy costs. Oil import prices surged 78.5% YoY, while non-oil import price inflation moderated slightly to 4.4% from 4.8%."

"The divergence suggests that imported price pressures remain largely energy-driven for now, although sustained increases in oil prices could eventually feed into broader inflation. Imported inflation risks remain a consideration for MAS, which maintained its appreciating S$NEER policy stance in October."

"Daily momentum is not indicating a clear bias while decline in RSI moderated. 2-way trades likely for now."

"Support at 1.2760 (50 DMA), 1.2740 (61.8% fibo retracement of 2026 low to high). Resistance at 1.2820/50 levels (100 DMA, 38.2% fibo)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)