The USD/SGD exchange rate jumped to a high of 1.3533, the highest level since March 10 as the dollar index (DXY) surged. The pair has soared by about 2.50% from the lowest level in March of this year as the debt ceiling crisis continued.
Singapore GDP and debt crisis
The USD to SGD exchange rate has been in a strong bullish trend in the past few days as investors focus on the debt ceiling issue. Democrats and Republican negotiators have struggled to reach an agreement on how to raise the debt ceiling.
As a result, there are concerns that the American government will run out of money soon and force it to default on its obligations. In a statement, Fitch, one of the biggest credit rating agency, announced that it was putting the US economy in a rating watch negative zone.
Despite the ongoing brinkmanship, analysts believe that the two sides will reach a deal in the coming days. The two sides are simply attempting to get as much concessions as possible ahead of the June 1 deadline.
The USD/SGD pair jumped after the latest minutes by the Federal Reserve. In that meeting, the bank decided to hike interest rates by 0.25% and continue with the quantitative tightening (QT) issue. The minutes showed that the committee was torn about what to do next.
Some officials saw no urgency of raising interest rates since inflation has continued falling in the past few months. Others believe that the Fed should continue hiking rates since inflation is at an elevated level.
The USD/SGD pair also jumped despite the strong rebound of Singapore’s economy. Data shows that the economy expanded by 0.4% in the first quarter compared to 0.1% in the same quarter in 2022. The statistics agency attributed this growth to the tourism sector.
USD/SGD technical analysis
The 4H chart shows that the USD/SGD exchange rate has been in a strong bullish trend in the past few weeks. It moved above the key resistance level at 1.3492, the highest level on May 19. The pair also jumped above the key resistance point at 1.3392, the highest point on April 25.
It has moved above the 25-day and 50-day exponential moving averages (EMA) while the Relative Strength Index (RSI) has moved above the overbought level. Therefore, the pair will likely continue rising as buyers target the key resistance at 1.3573, the highest point at March 10.
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