The unstable political situation in the EU has had a negative impact on the EUR/SGD over the past few months. However, the situation has changed unexpectedly since November with the formation of an upward trend. The support line has already changed its direction. The resistance line has shifted and is ready to reverse upwards in the near future.
This week the Euro unexpectedly received support based on news from Germany where the business climate index in October rose to a record level, pointing to a steady growth in the economy. In addition, investors expect an improvement in the political situation in the near future after the Social Democratic Party of Germany on Friday agreed to hold talks on forming a coalition.
Economic indicators in Singapore had a mixed effect on the SGD's value. The volume of the manufacturing production in October rose by 14.6%, but investors had expected growth by 15.5%. The inflation rate remained unchanged and has kept at the 0.4 percent level for the third month in a row. It was expected that in October inflation will increase by 0.5%. At the same time, a week ago GDP data for Singapore showed an impressive GDP growth by 5.2% in Q3, which is a record growth for the last four years.
It should be noted that despite the formation of an upward trend, the euro is still under some geopolitical risk because of the high probability that the negotiations to form a coalition will fail. The Social Democratic Party agreed to discuss their part in the coalition without much enthusiasm, under a certain pressure due to the difficult political situation. However, in this case the most optimal course of action would be the deals to BUY, given the stable economic situation in the EU. The stochastic oscillator confirms the efficiency of the deals to BUY, in accordance with the recently formed uptrend.
