MYR weakened against the USD last week, pressured by the reimplementation of Movement Control Order (MCO) and an emergency decree by the King. However, the local note pared some of its losses due to the stabilising crude oil price and weakening USD following Fed's Powell dovish remarks and president-elect Biden's fiscal stimulus announcement.
MYR is expected to trade range-bound between 4.00-4.05 this week amid the expectation of another 25 bps cut by the BNM and continuous uncertainty of the domestic COVID-19 situation. Nevertheless, continuous weakness of the USD, coupled with positive China data and improving Brent crude oil price should continue to provide support for the MYR.
Technical Analysis
5-day EMA indicator suggests that the MYR may continue its weakness from last week, charting a minor depreciation against the USD by 0.05% to 4.039 this week.
The pair faces an initial support at (S1) 4.030, followed by (S2) 4.023. On the other hand, should a sustained rise above (R1) 4.050 occur, it would affirm an extended bearish MYR trend.
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