Kenanga Research & Investment

Ringgit Weekly Outlook - To trade range-bound while technical suggests a bullish reversal

kiasutrader
Publish date: Mon, 28 Jun 2021, 10:36 AM

Fundamental Overview

  • Despite falling US dollar index (DXY) and higher Brent crude oil price, MYR weakened to its lowest level since early November last year due to the rising US 10-year Treasury yield and lack of buying interest amid post-FOMC risk-off mood. To add, the local note was further pressured as the S&P Global Ratings has retained its negative outlook on Malaysia's sovereign credit ratings.
  • MYR may trade between 4.15-4.17 against the USD as the DXY is expected to remain range-bound at least until the release of June non-farm payrolls figure on Friday. The local note’s direction for this week is expected to be influenced by the government’s decision to keep the phase one restrictions in place, Malaysia’s trade figures, manufacturing PMI readings and OPEC+ ministerial meeting outcome.

Technical Analysis

  • MYR is expected to strengthen slightly by 0.06% against the USD to 4.154 as signalled by the 5-day EMA for this week.
  • Initial support stands at (S1) 4.148 and a breach below the (S2) 4.140 level is needed to reverse last week's MYR downtrend. On the flip side, should the MYR bearish trend continue due to the risk-off mode, the USDMYR pair could trade around the (R1) 4.164 - (R2) 4.171 level or even higher.

Source: Kenanga Research - 28 Jun 2021

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