USD/SGD fell and closed below 1.30- handle for the first time in nearly 10 years, OCBC’s FX strategists Frances Cheung and Christopher Wong note.

Risks skewed to the downside

“Softer UST yields and USD owing to renewed hopes for larger Fed cut was the main trigger. Bullish momentum on daily chart faded while RSI fell. Risks skewed to the downside. Support at 1.2950 levels (recent low), 1.2910 levels. Resistance at 1.3040 (21 DMA), 1.31 levels.

“S$NEER was last estimated at ~1.87% above our model-implied mid, with model implied spot lower bound at 1.2953. With S$NEER close to its strong end of its band, the room for further downside in USD/SGD will continue to be restrained intra-day unless broader USD takes another leg lower, then the implied lower bound of USDSGD can shift lower.”

“Near term, we expect the pair to take cues from USD. US retail sales (Tue) and FOMC (Thu) may provide the catalyst.”