The recent forecasts for the USD to SGD exchange rate reflect a prevailing bearish sentiment regarding the US dollar, largely driven by expectations of aggressive rate cuts by the Federal Reserve in 2026. Recent data indicated a surprising drop in the US inflation rate from 3% to 2.7% in November, which has contributed to an erosion of USD value as markets anticipate the Federal Reserve will shift towards monetary easing. Analyst expectations are leaning towards multiple rate cuts beginning as early as mid-2026, which would diminish the USD's yield advantage compared to other currencies.
As of now, the USD to SGD exchange rate is nearing 60-day lows around 1.2880, slightly below its three-month average of 1.2965, indicating a stable range from 1.2830 to 1.3081. This price action suggests a consolidation phase for the pair amid mixed signals from the US economic landscape. While the labour market remains resilient, slowing growth indicators—like weakening manufacturing PMIs and declining consumer spending—are raising concerns about the broader economic outlook.
Conversely, the Singapore dollar (SGD) is experiencing pressure from its monetary policy adjustments as the Monetary Authority of Singapore (MAS) has eased its policy to support economic growth amid lower inflation projections. Although core inflation has slowed significantly, with reports indicating a drop to 0.6%, the influence of U.S. tariffs on Singaporean exports has created additional challenges. Such dynamics are undermining the SGD’s potential strength, although the recent political stability following the general elections might bolster investor confidence.
In the global context, analysts note that the SGD's outlook could be further complicated by trade tensions and the broader market sentiment. Observers are therefore expecting a range-bound USD/SGD until clearer signals emerge from the Federal Reserve or the MAS. Medium-term concerns, particularly regarding the fiscal dynamics in the U.S. and global trade economics, suggest that the USD may continue to face downward pressure against the SGD in the upcoming months.
