Singapore Dollar: OCBC Sees Relatively Limited Scope for a Rebound Against US Dollar

USD/SGD has edged lower as the US Dollar (USD) and US yields softened, even as Singapore’s import prices point to strong energy-led inflation, according to OCBC strategists Sim Moh Siong and Christopher Wong. Their medium-term outlook for the Singapore Dollar (SGD) remains constructive. However, they expect declines in USD/SGD to be limited unless broader USD weakness intensifies, with key support and resistance levels framing two-way trading in the near term.

How do energy-led inflation and range levels shape the outlook?

"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.)