The USD to SGD exchange rate has been under pressure recently, primarily driven by expectations of aggressive rate cuts by the Federal Reserve in 2026. Following a surprising drop in the US inflation rate from 3% to 2.7% in November, analysts noted a shift in market sentiment towards a dovish monetary policy outlook, which has contributed to a weakening US dollar. This has been compounded by mixed economic data from the US, revealing slowing growth and an emphasis on a resilient labor market, creating a complex backdrop that is likely to maintain downward pressure on the USD.
The current USD/SGD exchange rate has hit 90-day lows around 1.2839, standing just 0.9% below its three-month average of 1.2962. Trading has remained within a modest range of 1.2839 to 1.3081, indicating market stability amidst a broader weakening USD trend. As the dollar's haven appeal diminishes and risk appetite increases, it is reasonable to expect further softness in the USD unless there are significant shifts in economic indicators.
On the Singapore dollar front, the Monetary Authority of Singapore (MAS) has recently adjusted its monetary policy to support economic growth in light of easing inflation and external trade pressures. However, developments such as US tariffs on key Singaporean exports have posed additional challenges for the SGD, introducing bearish sentiment that could limit opportunities for appreciation against the USD.
Looking ahead, the focus will remain on key economic data releases, including consumer sentiment indices and inflation prints from both the US and Singapore. A continued trend of soft inflation and strong labor indicators could reinforce bearish sentiment for the USD, while any signs of consistent economic resilience in Singapore could provide support for the SGD. Analysts will be closely monitoring these indicators as they could influence the direction of the USD/SGD exchange rate in the coming weeks.
