- EURUSD Elliott Wave Analysis: Correction With In Uptrend
- USDJPY Elliott Wave Analysis: Bearish Continuation
- EURUSD remained stable after S&P downgraded the AAA credit rating of the Eurozone
- The single European currency continues to lose ground on Friday. US GDP data on focus today.
- EURUSD trading below the 1.3700 level after the US Federal Reserve scaled down its asset purchase program. US Unemployment Claims on tap.
4 Hourly Chart
USD/SGD rallied yesterday during US trading hours despite the weakening of USD that was spotted on majors such as AUD/USD and EUR/USD. This should be a sign that bullish sentiment is strong, but they met an equal match when price hit 1.2625 – the previous swing high back on 10th Jun and the structural support back in late May. Bears sent price scurrying below 1.26, and currently price is trading within the consolidation range of 12th Jun between 1.253 and 1.258. Stochastic curve is pointing firmly down with a fresh bearish signal as Signal line has just recently peeked below 80.0, suggesting that a bearish cycle is starting now. However, it is possible that the rising trendline will be able to provide some form of support around 1.255. If the level is broken, the likelihood of a double top formation increases but price will ultimately need to clear 1.25 for a double top scenario which may lead to 1.24 and potentially beyond.
This has been mentioned on numerous occasion, that SGD tends not to be volatile and unmoved as fundamentals of Singapore tended not to shift wildly. Furthermore, MAS has been taking a hands off approach to SGD’s recent strength, and is likely to remain so even after October’s policy meeting. Hence the main driver of USD/SGD remains firmly in the seat of USD. That being said, yesterday’s rally showed that technical pressures cannot be ignored either, which implies that a break of 1.255 and the confirmation of a double top pattern may potentially drive prices strongly.
With regards to USD fundamentals, there are good reasons to believe that USD’s recent weakness can be attributed to the easing of Fed’s QE tapering rumors. This would mean that USD may be the surprise winner tonight should FOMC announcement turned out to be less dovish than expected. In theory, that should mean a higher USD/SGD in such an event, but if USD/SGD remain unmoved or instead head lower, the case for strong technical bears will be convincing and we may see the Double Top pattern come to fruition.
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