Fundamental Overview

▪ Despite falling USD index, MYR softened to an eight-week low against the greenback on heightened ringgit selling pressure amid negative sentiment surrounding the crude oil market on fears of rising COVID-19 cases in Asia and a potential US-Iran nuclear deal. To add, the local note was pressured by the continued rise in local COVID-19 cases, which rose past the 6,000 mark since 19th May.

▪ MYR is expected to trade in a volatile range of between 4.116 and 4.158 this week amid the announcement of a tighter MCO 3.0 measures starting from 25th May. Despite the prospect of a weaker USD, worsening domestic COVID-19 situation and oil market uncertainty may cause investors to shy away from the local FX market. However, expectation of continued strong Malaysia trade performance should help to support the ringgit.

Technical Analysis

▪ 5-day EMA indicator suggests that the MYR may reverse its downtrend and appreciate slightly by 0.09% against the USD.

▪ The short-term technical outlook indicates that the USDMYR pair may test the immediate support area at (S1) 4.128. On the downside, the bullish MYR scenario may no longer hold if the pair jump towards the (R1) 4.149 resistance level.

Source: Kenanga Research - 24 May 2021