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EUR/SGD: Fundamental Review & Forecast

Published on: 17/03/2017

A month ago on the chart of the EUR/SGD we saw an uncertain situation - a weak downward trend, which seems more like a flat one. However, the situation has changed sharply: the Euro started losing positions and the downtrend became rapid as never before.

Investors evaluated the Singaporean economy and its potential for growth. Nevertheless, the situation changed again: the Euro has been strengthening since the beginning of March amid most currencies and has stimulus factors for further growth. In particular, this week the Euro rose due to the results of the elections in the Netherlands, where the eurosceptics were defeated. The currency was also influenced by statements by the ECB President who shared positive forecasts for the EU economy and lower risks for the eurozone. This was confirmed by the latest data: in Italy, for example, the volume of retail sales grew in February by 1.4% against the forecasted 0.1% and while the industrial production in the Eurozone grew by only 0.9%, in Greece and Ireland it increased by 2.5% and 3.4%, respectively. It's very important, considering these are some of the weakest economies of the EU.

EUR/SGD, H 4 chart
Thus, the Singaporean dollar weakened under the pressure of the Euro. It was also negatively impacted by the economic data from China, where news was revealed about a negative trade balance for the first time in three years.

On the EUR/SGD chart we can see the formation of a new rapid upward trend, but the latest data from Singapore can strengthen the SGD again: recent data on the Chinese economy gave confidence to investors. We expect further growth in the economy despite some disappointing signals. Today we got new data about Singapore’s non-oil domestic exports (Nodx) in February. It has grown by 1.4% for the fourth consecutive month, and by 21.5% in a year, which exceeded forecasted level almost twice. Retail sales in Singapore also rose unexpectedly by 2%. Exports are growing, though this is associated with the seasonal increase in sales of the consumer electronics sector.

The MACD and Stochastics oscillators indicate a good moment to open short deals. It's the right decision, taking into account the positive statistical data in Singapore, which should not allow the Singapore dollar to rapidly lose positions against the Euro.

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