OCBC analysts see modest upside risk for USD/SGD as the Strait of Hormuz standoff and the US-Iran war reduce risk appetite and lift imported cost pressures. USD/SGD inched up overnight alongside a broader US dollar rebound, and was last around 1.2780.
They report that bearish momentum on the daily chart has faded and the RSI has risen. Near-term resistance is at 1.2790/1.28 (21 and 100 DMAs, plus the 38.2% Fibonacci retracement of the 2026 low-to-high move) and 1.2850 (200 DMA and the 23.6% Fibonacci level).
Support is seen at 1.2750/60 (50 DMA and the 50% Fibonacci level) and 1.2670 (76.4% Fibonacci). They describe the Singapore dollar as a regional defensive currency that may hold up better than higher-beta FX.
OCBC economists expect energy and petrochemical costs to rise for businesses due to the prolonged conflict and Hormuz closure. They also expect Singapore inflation to move towards 2% as these costs pass through supply chains into 2Q26 and possibly beyond.
We see slight upward risk for the USD/SGD pair, which is currently tracking a broader rebound in the US dollar. The persistent crisis in the Strait of Hormuz has pushed Brent crude prices above $115 a barrel, a significant jump from the $90 range we saw just last month. This risk-off environment is driving capital towards the perceived safety of the dollar.
On the daily chart, the bearish momentum for the pair has clearly faded while the Relative Strength Index is rising, suggesting that the recent downtrend may be reversing. We are closely watching resistance around the 1.2790 and 1.2850 levels. A sustained break above these points could indicate further upside for the USD against the Singapore dollar.
The situation in the Middle East is creating direct inflationary pressures for Singapore, which could complicate the outlook for the coming weeks. Economists are now forecasting that inflation for the second quarter could accelerate, with the latest March Consumer Price Index data coming in at 3.5%, surprising the market. This reflects the rising energy and shipping costs now feeding through the economy.
While the Singapore dollar typically acts as a regional defensive currency, it now faces this domestic inflation threat. Looking back at the market reaction to the energy shock in 2022, we saw a similar pattern where the US dollar strengthened globally even against other safe-haven currencies. Derivative traders might consider strategies that protect against a rise in the USD/SGD exchange rate, as the global flight to safety may temporarily outweigh the MAS’s strong policy stance.
