Fundamental Overview

• MYR plummeted to 4.14 against the USD last week as the USD index (DXY) rose to above the 92.0 level for the first time since 12th April in reaction to the Fed's hawkish shift. Despite the sharp fall, MYR recorded the smallest percentage of depreciation among most Asian currencies as the drop in ringgit was cushioned by firmer crude oil prices and improved sentiment due to increased local vaccinations.
   
• Even though the 10-year US Treasury yield retreated back to 1.44% on Friday's closing after rising to 1.58% post-FOMC, the local note may resume its bearish momentum above the 4.14 level as the DXY may continue to move higher if the overall tone of Powell's testimony this week remained hawkish. Nevertheless, higher Brent crude oil price and Malaysia's accelerated vaccination program should limit ringgit's further depreciation.

Technical Analysis

• On the contrary, our 5-day EMA indicator suggests that MYR might appreciate against the USD by 0.24% to 4.129.
   
• Technical-wise, the pair faces an initial support at (S1) 4.123, followed by (S2) 4.106. On the other hand, should a sustained rise above (R1) 4.148 occur, it would affirm an extended bearish MYR trend.

Source: Kenanga Research - 21 Jun 2021