Fundamental Overview

▪ MYR closed lower for the fifth consecutive week and breached the 4.11 level for the first time since Nov 2020 as the 10-year treasury yield traded above the 1.6% level following Biden’s vaccination announcement. To add, weak domestic labour market data for January further weakened the ringgit against a strengthening USD last week.

▪ MYR's sell-off is expected to persist ahead of the FOMC meeting this week as the Fed officials are expected to remain sanguine about the growth outlook and may revise the Summary of Economic Projections upward, a move which could drive the Treasury yields higher. Meanwhile, higher oil prices should continue to limit ringgit depreciation.

Technical Analysis

▪ Despite lack of MYR’s positive catalyst, the EMA technical indicator projects MYR to appreciate marginally by 0.24% to 4.109 this week, counting on a potential technical rebound for the local note.

▪ From a technical perspective, the safe-haven dollar may face some downward pressure this week, with an immediate support observed at (S1) 4.108 level. Inversely, a break above the (R1) 4.128 resistance level is needed to confirm the continuation of USD uptrend.

Source: Kenanga Research - 15 Mar 2021