SGD losing ground versus the greenback after strong 6-week rally

It is now set for further losses.

The SGD is once again under pressure after a strong 6-week rally against the greenback.

A report released today by BMI Research stated that the SGD now looks weak from both a technical and fundamental perspective, following its 5.6% appreciation after the Monetary Authority of Singapore (MAS) stood pat in its April monetary policy statement.

“The currency has lost considerable steam and now looks set for further losses. Technically, the SGD has failed twice to make a convincing break through the 50.0% Fibonacci retracement level near SGD1.3150/USD, and has also broken weaker following a brief consolidation pattern,” the report noted.

Apart from its technical weakness, the SGD is also under threat from the US dollar's recent recovery in global currency markets.

“The JPMorgan US Dollar Index has rallied by 4.2%. The global reserve currency has also been boosted by fundamental factors from the US including a slightly higher-than-expected core CPI reading for April as well as reasonably strong labour market data. With external factors likely to weigh on the currency further over the remainder of the year, we retain our end-2015 forecast of SGD1.3900/USD,” stated BMI Research.