The Singapore Dollar (SGD) has come under pressure as the US Dollar (USD) strengthens and risk sentiment softens, particularly following a sell-off in tech and AI-linked equities. According to OCBC analysts Sim Moh Siong and Christopher Wong, the USD/SGD pair drifted higher overnight, last seen at 1.2970, with daily momentum remaining bullish and the Relative Strength Index (RSI) entering overbought territory [1]. Resistance levels are noted at 1.2980 and 1.3030, while support is seen at 1.29 and 1.2840/50 [1].
Recent economic data showed that Singapore's May headline and core Consumer Price Index (CPI) printed softer-than-expected at 1.8% and 1.4% year-on-year, respectively, both below OCBC's forecast of 1.9% and 1.5% [1]. The softer inflation was attributed to higher food and retail inflation being offset by lower services inflation. OCBC economists highlighted that domestic cost pressures are tapering off, with services unit labour costs expected to rise at a slower pace this year due to moderating wage growth and a cooling labour market. Consumer spending may also become more cautious amid economic uncertainty and higher prices [1].
Given the undershooting of core CPI and easing global energy prices, OCBC now sees less urgency for the Monetary Authority of Singapore (MAS) to tighten policy at the upcoming Monetary Policy Committee (MPC) meeting in July, especially if the core inflation trajectory continues to ease into the first half of 2027 [1].
While the SGD may remain relatively resilient compared to its peers, it is not immune to the effects of higher US Treasury yields and a firmer USD. If the strong USD environment persists, USD/SGD is expected to stay supported in the interim [1].
CONCLUSION
The Singapore Dollar is facing upward pressure from a strong US Dollar and softer domestic inflation, reducing the likelihood of MAS tightening in July. Market participants should expect continued consolidation near the upper range for USD/SGD, with resilience in SGD but ongoing vulnerability to global USD strength.