USDMYR Technical Analysis

The US Dollar was lower against the Ringgit on Thursday and is now trading at 4.2290. The fall comes in line with the main direction of the Dollar on the day, which fell against almost all of its counterparts. The Producer Price Index data brought higher-than-expected inflation (11.2% real against 10.6% forecast). Despite the reading of more inflation for the producer, the USD fell, in part because the market was already pricing in that inflation. From a technical point of view, yesterday’s daily chart candlestick shows a strong rejection of bearish strength along with the false breakout of the round number of 4.2300. Such a bearish entry could put pressure on USDMYR to fall to the 4.2050 over the next few days. At the moment USDMYR remains stuck between the support of 4.2050 and the resistance of 4.2400. The market is likely to remain that way until the next FOMC meeting which should raise the interest rate for the USD by 0.5%.