One month ago the USD/MYR was near the 4.2100 vicinity which was part of a consolidated range it had been able to attain quite well since the first week of August, but as of this morning the currency pair is near 4.1100 after a surge of recent selling.
The consolidated trading which was part of the USD/MYR for several months has evaporated. The long held range near the 4.2100 to 4.2300 vicinities has vanished. Selling in the USD/MYR since early November has been dramatic at times (slight reversals upwards have been fast too) and now the currency pair as of this morning is near long-term lows around 4.1100.
The last time the USD/MYR touched its current vicinity was in late May 2021. USD/MYR selling yesterday built strength and this morning’s values have seen additional moves lower in the currency pair. Day traders of the USD/MYR should not get over confident about the trend which has developed, but since early November the currency pair has produced sincere volatility as financial institutions are clearly shifting their outlooks.
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Emerging Market Strength and Federal Reserve Outlook
Interest rates in Malaysia remain stable, inflation appears to be under control and economic growth continues to spur confidence in the nation. Singaporeans continue to come to Malaysia to buy goods that are less expensive in Malayia compared to Singapore too, even as the MYR has grown stronger. Financial institutions working with the Malaysian Ringgit are likely also looking at the U.S Federal Reserve while judging their cash forward outlooks.
The U.S Fed will deliver its interest rate decision next Wednesday and it appears many global players in Forex are working under the assumption that another cut to the Federal Funds Rate is going to take place. The USD/MYR is correlating to recent weakness in the USD in the broad Forex market which has developed the past few days.
Low Volumes and Need for Risk Management
In many respects the USD/MYR remains an esoteric currency pair for most traders. The USD/MYR doesn’t have a lot of volume and its trading hours are limited.
- However, the USD/MYR delivered a rather consolidated price realm since last August, and is now producing incremental selling.
- Day traders are right to consider if the USD/MYR has sold off too rapidly the past few days of trading, but looking for a sudden reversal higher to develop might prove dangerous.
- In fact, if the U.S Federal Reserve delivers an interest rate cut next week, the USD/MYR could find that a challenge of the 4.1000 level and below is appropriate.
USD/MYR Short Term Outlook:
Current Resistance: 4.1135
Current Support: 4.1080
High Target: 4.1180
Low Target: 4.1010
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