OCBC strategists Sim Moh Siong and Christopher Wong highlight that the USD/SGD currency pair is experiencing slight upside risks as the ongoing Hormuz standoff continues to dampen risk appetite and increase imported cost pressures for Singapore. The Singapore Dollar (SGD) is described as a regional defensive currency, but analysts note that bearish momentum on the daily chart has faded and the Relative Strength Index (RSI) for USD/SGD has risen, indicating a potential for further gains in the pair. As of the latest update, USD/SGD was trading at 1.2780, with resistance levels identified at 1.2790/1.28 and 1.2850, and support at 1.2750/60 and 1.2670 [1].
OCBC expects Singapore's inflation to accelerate toward 2% as energy-related costs stemming from the Middle East conflict filter through supply chains. The strategists warn that the prolonged US-Iran war and the continued closure of the Strait of Hormuz could further elevate energy and petrochemical-related costs for businesses, contributing to inflationary pressures into the second quarter of 2026 and potentially beyond [1].
Despite these pressures, the SGD is expected to maintain its status as a defensive currency in the region, potentially holding up better against higher-beta foreign exchange counterparts. However, the risks for USD/SGD remain skewed to the upside in the near term, given the current geopolitical and inflationary environment [1].
CONCLUSION
OCBC analysts see upside risks for USD/SGD as the Hormuz crisis persists, with inflationary pressures likely to intensify due to higher energy costs. While the SGD remains a defensive currency, market participants should monitor resistance and support levels closely as geopolitical tensions and inflation developments unfold.