Fundamental Overview

• Despite Fitch Rating’s decision to downgrade Malaysia's sovereign debt rating to BBB+, MYR soared to its highest level in more than two years last week due to a surprising rebound in Brent crude oil price, COVID-19 vaccine optimism and further weakening of the US dollar.
• MYR may continue to gain strength against the greenback and breach the major psychological threshold of 4.00 as the US government plans to accelerate the COVID-19 inoculation rollout. The local note may continue to ride on the weaker US dollar this week as US stimulus talks continue.

Technical Analysis

• EMA technical indicator signals a reversal in the USDMYR trend, with the ringgit expected to depreciate against the greenback by 0.26% to 4.060 this week.
• The pair faces an initial resistance at (R1) 4.064, followed by (R2) 4.079. Conversely, a sustained dive below (S1) 4.042 suggests an extension of the bullish MYR trend.

Source: Kenanga Research - 14 Dec 2020