Fundamental Overview

▪ MYR closed lower against the USD late last week attributable to an attempt by the government to declare a state of emergency along with surging COVID-19 infections. Nonetheless, the downside was capped by a weakening USD after US President and House Speaker boosted hopes for a larger stimulus, as well as optimism over Brexit talks.

▪ The local note may continue its downtrend this week weighed by rising COVID-19 cases and the lingering political uncertainty following the King’s decision on Sunday to not declare an emergency. However, the downside would be limited as major economic releases are expected to mark a positive recovery, which could reverse ringgit downtrend.

Technical Analysis

▪ MYR is seen to strengthen by 0.17% against the USD to 4.149 as signalled by the 5-day EMA for this week.

▪ Initial support stands at (S1) 4.147 and a breach below the (S2) 4.137 level is needed to reverse last week's MYR downtrend. On the flip side, should the MYR bearish trend continue due to the risk-off mode and the lingering political uncertainty, the USDMYR pair could trade around the (R1) 4.162-(R2) 4.167 level or even higher.

Source: Kenanga Research - 26 Oct 2020