Trading EUR/SGD

EUR/SGD is an exotic forex pair with an interesting history across both currencies. While the Euro is the official currency of 19 member states of the European Union, the Singapore Dollar is controlled by the central bank to manage inflation, making it one of the most stable currencies in the world. In this article, we review the advantages and disadvantages of day trading EUR/SGD, investing strategies and key events that influence the forex pair’s exchange rate.

EUR/SGD Trading Brokers

Forex.com are a leading forex broker. Offering the largest range of currency pairs (80+) and some of the tightest spreads in the industry.
NinjaTrader offer Traders Futures and Forex trading. Use Auto-trade algorithmic strategies and configure your own trading platform, and trade at the lowest costs.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
The leading US trading Exchange. Nadex offer genuine exchange trading to US clients on Binary Options. Fully regulated by the CFTC.
Trade on a handful of the most traded currency pairs with leverage.
Use digital options to take straightforward buy and sell positions on a range of currencies.
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Trade on FX pairs with 1:500 leverage.
Just2Trade offer hitech trading on stocks and options with some of the lowest prices in the industry
Zulutrade provide multiple automation and copy trading options across forex, indices, stocks, cryptocurrency and commodities markets
IB Boast a huge market share of global trading. With a minimum deposit of $10,000 however, they remain an option for larger traders only.
One of the largest discount brokers in the US, with a fixed trading commission and access to a large array of trading products and securities
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Chart

The EUR/SGD live chart shows the current Euro to SGD conversion rate.

EUR/SGD Explained

EUR/SGD is defined as exotic because it is a major currency (the Euro) paired with the currency of a smaller economy (Singapore). The exchange rate represents how much of the quote currency, the Singapore Dollar, is needed to get one unit of the base currency, the Euro. Another way to put it is the amount of Singapore Dollars that you would receive for a conversion of 1 Euro to SGD. SGD to EUR would show the inverse.

Additional graphs and exchange rate tools for EUR/SGD can be found on currency converter websites such as xe.com. Simpler websites such as Coinmill provide current conversion rates for 1 EUR into SGD.

Why Trade EUR/SGD?

There are several reasons why investing in EUR/SGD is a good option:

  • Potential profits – While the Singapore Dollar is a stable currency with a long term growth trend, the Euro is more volatile, so EUR/SGD could potentially bring high profits if investors have a high-risk tolerance.
  • Economy knowledge advantage – As this currency pair is better analysed using fundamental analysis (evaluating external events and influences) rather than technical analysis (identifying trends and patterns based on historic data), a deep macroeconomic understanding of the EU and Singapore will provide you with a trading advantage. Because of this, exotic pairs like EUR vs SGD can sometimes be easier to forecast than major forex pairs.
  • Trading costs – Generally, forex has low trading costs compared with other instruments such as stocks and shares. Most brokers don’t charge a commission for trading forex, making their money from spreads instead.

Risks Of Trading EUR/SGD

There are also disadvantages to trading EUR/SGD:

  • Technical analysis – Because there isn’t a direct correlation between the two currencies, EUR vs SGD predictions are difficult and technical analysis often complicated.
  • Availability of information – There is less technical information available about the Singapore Dollar as it is not a major currency, making the EUR to SGD rate more difficult to forecast.
  • Liquidity – EUR/SGD has less liquidity than major forex pairs such as EUR/USD. Liquidity can be translated as buying power, meaning it can be more difficult and costly to trade.
  • Wider spreads – Because of the reduced liquidity, brokers tend to charge more for the trading of exotic pairs.

EUR/SGD Day Trading Strategy

In this section, we discuss the key factors to consider when trading EUR/SGD.

Forex Brokers

To trade EUR/SGD, the first thing you’ll need to do is set up a trading account. It’s important to have a good broker for this and there are several things to consider:

  • Regulation – Where is the broker regulated and with what standards do they comply? Find out if your funds are protected, for example if the broker becomes insolvent.
  • Platform – Brokers may offer their own proprietary platforms, or license other platforms such as MetaTrader 4. Check platform reviews to ensure they meet your trading and live charting needs, including suitable indicators to enable Euro versus SGD trend analysis.
  • Spreads, commission and additional fees – Brokers will often make money from spreads on forex which is the difference between the EUR/SGD buy and sell price. These spreads can be fixed or variable. Check if brokers’ spreads are competitive and if any additional fees are applied, such as account fees or commission that might eat into your profits.
  • Demo account – Some brokers offer a free demo account option. This is a great way to practice trading strategies with virtual funds, before trading with a real account. Brokers often offer demo accounts that reflect the same environment as their live account, giving clients the opportunity to get familiar with the platform, before depositing real funds.
  • Withdrawal of money – Ensure you have easy access to your funds. In particular, look out for long withdrawal times, minimum withdrawal requirements and withdrawal fees.

For EUR/SGD trading in Singapore, the three most popular forex brokers are CMC, IG and Oanda, all of whom are regulated by the Singapore Central Bank, MAS. However, a maximum forex leverage of 1:50 is offered due to Singapore regulations, which isn’t as high as can be found elsewhere. Due to the relative stability of currency in comparison with equities, leverage is often used to increase potential profits. However, traders should also be aware of the risks involved with using leverage, which can increase losses as well as profits.

Risk Management

Ensure you have a strategy for how much you’re willing to risk on each trade. It’s advised that traders keep this low to reduce losses; it’s uncommon for successful traders to risk more than 2% of their total capital in a single trade.

Economic News

It’s particularly important for the EUR/SGD FX pair that traders keep up to date with economic news. Many online resources offer regular updates for EUR/SGD, including Yahoo Finance, Google Finance, Channel News Asia, and the Financial Times.

Additionally, traders should be aware of when key financial reports are released, so they can react accordingly. Refer to the rest of this article to understand specific factors that influence the Euro and Singapore Dollar and key dates to look out for.

EUR/SGD Timing

The best time of day to trade is generally considered to be 1pm – 5pm GMT, as this is when both the London and New York markets are open. These trading centres account for a huge proportion of forex trades, meaning that there is more liquidity in the market at this time. This usually results in tighter spreads, allowing for trading at a better price.

Forward rates should also be considered when trading EUR/SGD. In forex investing, although ‘spot market’ refers to ‘on the spot’ trading, trades are executed on the settlement date which is usually two business days after the agreement.

Because of this, most brokers roll the position forwards and charge a swap fee, which is an overnight interest rate. This means you’ll either earn a credit (if the long currency interest rate is higher than the short currency) or a debit (if the short currency interest rate is higher than the long). Triple swap rates are usually applied if trading on a Wednesday to account for the weekend after the two business days. Traders should therefore keep an eye on EUR/SGD forward points, which are the points added to or subtracted from the FX rate to account for this.

Volatility

The volatility of an instrument determines how much potential profit or loss you could make. EUR/SGD is characterised by relatively minor fluctuations on charts and is therefore more suited to medium-term trading strategies. The infrequent reporting from the Singapore Central bank compared with other central banks also supports this strategy.

Traders are therefore advised to look at the history of the Euro vs SGD, including historical exchange rate data forecasts. 5 year and 10 year EUR/SGD charts are good options for this analysis.

Euro Background

In this section, we look at the history of the Euro and key influences on its value, to help you better understand how to forecast EUR/SGD.

Investing in the EUR/SGD

The Euro was established by the Maastricht Treaty in 1992, where the original 12 member states created an economic union and associated currency. The Euro was officially issued in 1999 and is now the official currency of 19 of the 27 member states of the EU. The countries that have adopted the Euro are referred to as the Eurozone.

What Influences The Euro?

Individual Country Economies

Germany, France, Italy, and Spain combined represent three-quarters of the Eurozone’s GDP, with Germany and France accounting for nearly 50% alone. Traders should therefore pay attention to these countries’ economies in particular when researching Euro performance. Keep on top of GDP, production and unemployment rates.

Inflation

Inflation is a key factor for all currencies, with high inflation generally resulting in currency depreciation. The key measure of inflation in the Eurozone is the Consumer Price Index (CPI). This indicator calculates the price of a basket of goods and services likely to be purchased by an average household. Traders typically follow the Core CPI, which is the CPI but without energy and food. This is because energy and food prices are more volatile and can distort the CPI.

Sentiment Reports

One of the most widely followed reports is the monthly German ZEW Economic Sentiment. Up to 300 financial experts are interviewed about their expectations of the economy for the next six months, including exchange rates. From this, a single indicator is published, allowing for an easy-to-interpret outlook on the European economy, which is highly valuable when trading EUR/SGD.

Monetary Policy

The European Central Bank (ECB) has a large influence on the Euro, as it sets target interest rates and controls the supply of the Euro currency. Press conferences from the ECB often cause currency volatility, especially during the question period. Ensure that you review ECB announcements when online trading EUR/SGD.

GDP & Economic Growth

GDP and economic growth reports indicate the overall state of the Eurozone economy. GDP is a measure of the goods and services produced, so a high GDP is a positive sign for the Euro. As mentioned, Germany and France play the biggest role here.

Balance of Payments

The balance of payments for a country is made up of three accounts: current, financial and capital. These provide a measure of a country’s interaction with other countries, including income and trade.

A current account surplus means there are more exports than imports, which is positive for currency. A current account deficit means the opposite. Again, it’s worth focussing on the current account report for Germany and France in particular.

Politics

The impact of politics on EUR to SGD has become especially relevant now. European Union politics as well as elections of key member states can have a large influence on the Euro. Keep up to date with trade deals, as well as countries entering and leaving the EU, such as the impact of Brexit.

Singapore Dollar Background

Singapore is a politically stable country with a small yet strong economy that attracts investors. Since the first prime minister was elected in 1959, there has been only one ruling party, the People’s Action Party (PAP).

How to trade the EUR/SGD

Singapore is highly dependent on exports, including electronics, pharmaceuticals and chemicals. This means the exchange rate has a much stronger influence on inflation than the interest rate. The central bank therefore controls inflation through the Singapore Dollar.

Singapore has undergone massive economic growth since the introduction of this exchange rate system in 1981, mainly driven by the manufacturing industry. This has meant Singapore has rapidly developed from a low-income to a high-income country, despite the mid-80s recession and Asian financial crisis.

What Influences The SGD?

Monetary Policy & Economic Growth

The Singapore Central Bank (MAS) uniquely conducts monetary policy through exchange rate setting rather than interest rates, by letting the Singapore Dollar rise or fall against a basket of currencies of major trading partners, within a fixed band.

Each currency in the basket has a different weighting depending on the volume of trading with that country which is revised periodically to reflect the latest data. The band provides flexibility to accommodate short term fluctuations. If the exchange rate falls outside the band, then MAS will buy or sell foreign exchange to guide the exchange rate back into the band.

The aim is to promote price stability to generate economic growth. This is called the Singapore Dollar nominal effective exchange rate (S$NEER). Because of this, the volatility of the exchange rate is low. The standard deviation of the S$NEER, which is a measure of variation, was 1.48% between Q1 81 and Q2 20, compared with 3.52% for the USD and 4.61% for JPY.

Overall the Singapore Dollar has seen a long-term appreciation trend, due to economic progression and high current account surpluses.

EUR/SGD Key Dates

Below are the key dates to be aware of when trading EUR/SGD, based on the external factors that influence this forex pair.

MAS monetary policy announcements are usually released in April and October each year. This is less frequent than the typical reporting from central banks, meaning EUR/SGD is suited to longer-term trading strategies.

The Europe CPI report is released monthly, with flash estimates released at the end of the month and the official CPI released two weeks later. The EUR/SGD exchange rate impact from the official report is often diluted by the effects of the flash report.
The Eurozone GDP report is released approximately two months after the end of each quarter. Analysts usually estimate GDP prior to this, though the release of the report still tends to have an impact on the Euro, especially when results are different from predictions.

The Singapore current account balance is released approximately two months after the end of each quarter. The Euro current account report is released monthly, usually during the second week of each month.

EUR/SGD Correlation

The Euro and Singapore Dollar aren’t highly correlated, as the EU is not one of Singapore’s top export destinations. However, traders should be aware of relationships with other currencies.

The EUR/SGD rate is highly positively correlated with EUR/USD. This means when EUR/USD increases, the EUR to SGD exchange rate is also likely to increase. Plotting EUR/USD and EUR/SGD on a live chart shows this clearly. This is because Singapore is highly influenced by exports to the US.

The EUR against SGD is also positively correlated with EUR/JPY, due to a trading agreement that has resulted in a high level of imports and exports between Singapore and Japan.

Final Word On Trading EUR/SGD

EUR/SGD is a pair that’s difficult to predict using technical analysis, and for this reason is more suited to experienced traders. However, having a deep understanding of both economies and their influencing factors will be very valuable. Though EUR/SGD has a long term declining trend due to Singapore’s economic growth, the Euro volatility means that profits are possible in the shorter-term. While the EUR/SGD 2021 outlook is more difficult due to effects of the Covid-19 pandemic on both economies, this may open up opportunities for traders.

FAQ

What is the conversion rate for 1 EUR in SGD?

The Euro to Singapore Dollar conversion rate moves continuously. Refer to a live chart to convert 1 EUR into Singapore Dollars.

What is the trend history of the Euro vs the SGD?

Overall, the Euro versus SGD has seen a long term declining trend, due to Singapore’s advancing economy and the Eurozone’s decrease in GDP growth. Events such as the Covid-19 pandemic and Asian financial crisis cause are responsible for fluctuations within this overall trend.

Should I invest in EUR/SGD?

EUR/SGD is an exotic forex pair suited to more experienced traders, due to the difficulty with forecasting trends. It’s important to understand the events that influence both the European and Singapore economies before trading this FX pair.

What affects the EUR v SGD rate?

The EU and Singapore central bank monetary policies both affect the Euro to SGD rate. The Euro is also subject to greater political influence from EU member states, unlike Singapore which has a more stable political background.

How can I trade EUR/SGD?

Traders will need to open a trading account with a broker that offers the EUR/SGD forex pair. Oanda, which is regulated by the Singapore central bank, is a good choice.