OCBC strategists Sim Moh Siong and Christopher Wong highlight that the USD/SGD currency pair is experiencing slight upside risks as the ongoing Hormuz crisis continues to impact market risk appetite and imported cost pressures [1]. The Singapore Dollar (SGD) is described as a regional defensive currency, but analysts note that bearish momentum on the USD/SGD daily chart has faded, with the Relative Strength Index (RSI) rising, indicating potential for further gains in the pair [1].
As of the latest update, USD/SGD was trading at 1.2780, having inched higher overnight in line with a broader USD rebound [1]. Key technical resistance levels are identified at 1.2790/1.28 (21, 100 DMAs, 38.2% Fibonacci retracement of the 2026 low to high) and 1.2850 (200 DMA, 23.6% Fibonacci), while support is seen at 1.2750/60 (50 DMA, 50% Fibonacci) and 1.2670 (76.4% Fibonacci) [1].
OCBC economists expect Singapore's inflation to accelerate toward 2% as energy-related costs from the Middle East conflict filter through supply chains [1]. They warn that the prolonged US-Iran war and continued closure of the Strait of Hormuz could further increase energy and petrochemical-related costs for businesses, contributing to inflationary pressures into the second quarter of 2026 and potentially beyond [1].
Despite these risks, the SGD is expected to maintain its defensive characteristics relative to higher-beta currencies, potentially holding up better in the current environment [1].
CONCLUSION
OCBC analysts see upside risks for USD/SGD as the Hormuz crisis persists, with inflationary pressures expected to rise due to higher energy costs. While the SGD remains a defensive currency, technical indicators and ongoing geopolitical tensions suggest further volatility ahead.