The Dollar gained even more strength against the Ringgit this Wednesday, reaching the highest level since August 2020, trading at 4.2015 before retracting slightly to 4.1990. The increasing concerns about dollar inflation gained an additional element this Wednesday, with the announcement of the U.S. Producer Price Index (PPI), a way to measure inflation from a producer perspective. This number came in much higher than expected (1.0% real versus 0.6% forecast) and that boosted the dollar. From a macroeconomic point of view, the market seems to be waiting for a position regarding the new monetary policies to curb this inflation situation. Should there be a sharp cut to the financial stimulus, the dollar will gain more power. From a technical point of view, the next resistance point is at 4.2250 and if the macroeconomic numbers continue to point to an increase in the US inflation, the USDMYR could reach that level in the next 10 to 15 days.
The Dollar has been gaining a lot of ground against the Thai Baht in recent days, which is now trading at 32,621 and near an important resistance area. As inflation in the US began to worry the financial market, the dollar has been gaining more and more space and the U.S. Producer Price Index (PPI) (released yesterday) confirmed those fears. After nearly a month of uninterrupted growth, now the dollar appears to be losing steam and may make a major retraction over the next few days. In terms of technical analysis, the dollar may have to retreat to the 31.80 level before resuming its bullish movement. The next most important resistance point is the 33.20 level, where the dollar is unlikely to break through without a major pullback.
