Fundamental Overview

• MYR traded higher against the greenback, lifted by Moody’s reaffirmation of Malaysia’s A3 rating, better-than-expected December trade figures and Fed’s reiteration of its ultradovish policy stance. These offset the pressure from doubts over the size of the US stimulus package.
• MYR may trade marginally lower this week due to the unabated surge in domestic COVID-19 cases, possible extension of the Movement Control Order 2.0 and delays in the global rollouts of COVID-19 vaccine. Unfavourable developments surrounding the USD1.9t stimulus negotiations could also trigger greater safe-haven demand.

Technical Analysis

• MYR is seen to depreciate slightly by 0.08% against the USD to 4.043 as signalled by the 5-day EMA for this week.
• Technically, MYR is expected to trade lower against the USD this week, with the pair’s immediate resistance level at (R1) 4.045, followed by (R2) 4.050. Alternatively, should the MYR bullish trend continue due to a shift in risk sentiment, the USDMYR pair could trade around the (S2) 4.035-(S1) 4.037 level.

Source: Kenanga Research - 2 Feb 2021