Fundamental Overview

▪ Despite a spike up in domestic COVID-19 cases and a relatively quiet crude oil markets, MYR still managed to maintain its bullish momentum against a weakening USD for the fourth consecutive week. The local note has been able to gain ground against the USD as the 10-year US Treasury (UST) yield has weakened so far in April to 1.54% last Thursday from 1.72% on 2nd April.

▪ MYR is expected to extend its gains and move closer to the 4.10 level as the USD index may continue to trade below the 91.0 level this week. Despite a potentially strong US's 1Q21 GDP reading, the USD is poised to extend its slide as Biden's tax proposal and an expectedly dovish FOMC’s outcome is seen to drag down the UST yields.

Technical Analysis

▪ Despite a weak USD outlook, our 5-day EMA indicates a potential corrective pullback in the USDMYR trend, with the ringgit expected to whipsaw against the greenback by 0.16% to 4.115 this week.

▪ Technically, the pair may move towards the (R1) 4.119 level if there is a shift in market sentiment. On the other hand, a sustained move below the (S1) 4.104 level may suggest an extension of the bullish MYR trend.

Source: Kenanga Research - 26 Apr 2021