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EUR/SGD: Fundamental Review & Forecast

Published on: 02/11/2018

The EUR/SGD rates are more like competitions for the status of the weakest currency, and there is no clear winner in this competition yet. The EUR, as well as the SGD at the moment have been influenced by many negative factors, the main one being the ongoing economic downturn. Most likely in this situation we can expect a change of the trend. Furthermore, there are signs of a resumption of the uptrend, given that the support line only shifted down with time, but the direction has not changed. At the same time, the resistance line has shifted significantly, but now it is returning to its place in the upward direction. The only question is the lack of incentives for the strengthening of the euro, but also incentives for the strengthening of the SGD in the near future are not observed.

Despite its strong potential, the euro is losing in price against most currencies due to the usual factors, such as a soft monetary policy by the ECB and weak macroeconomic statistics amid the conflict with Italy. The latest reports showed GDP growth of only 0.2% in the third quarter of 2018, which is 2 times less than in the previous period and the lowest growth rate for the last 4 years. Italy's GDP, which has recently been in conflict due to a high budget deficit, showed zero growth against the expected growth by 0.2%. The PMI index of business activity was lower by 0.1 pips than expected on the market (52.0). The unemployment rate remains unchanged at 8.1%.

In October the Singapore dollar managed to strengthen significantly against the weaker euro, but the situation in Singapore is also not inspiring. The trade conflict between the US and China is far from over. The volume of industrial production in Singapore declined for the fourth month in a row and in September fell to a negative value of -0.2%, which was unexpected for investors who forecasted growth by 3.5%, especially given that the last time the decline in manufacturing production was fixed 9 months ago. The low level of the PMI indices in China, both in the manufacturing and services sectors, also had a negative impact on the cost of the SGD.

EURSGD, daily

The stochastic oscillator is near the oversold zone; the MACD definitely shows a signal for the deals to BUY, which in this situation is the most optimal solution, since the recovery of the uptrend is the most likely in the medium term.

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