This Monday the US Dollar kept its move up against the Ringgit, hitting the highest price in 2 months, the 4.1500. Talking in terms of price movement, we could have 2 possible scenarios. Scenario 1: as this is a natural resistance area, there is a chance that the USDMYR will retrace a little, to the 4.1350 alongside this week, before gaining strength again to resume the uptrend. In an alternative scenario, investors will keep an eye on the possible break above the 4.1500 as this could put more strength to the Dollar and it could rise to the 4,1700. In the macroeconomic area, investors will pay attention to the speech coming from Jay Powell, FED’s chairman, due later today. Any clues regarding the monetary policy and the possible increase in the interest rate, could bring more power to the US Dollar in the short term.
The Ringgit has been trapped within a sideways price action against the Chinese Yuan in the last few days. The down trend that is now in place began in January 2020 and it did not show any significant retracement since then. Even though Malaysia still has its borders mainly closed, the market is looking forward to the next Consumer Price Index, due later this week. Should this number come higher than expected, investors will likely interpret this as inflation ahead and therefore, there will be room for an increase in the interest rates in the short term, which could mean a rise in the value of the Ringgit against the Chinese Yuan. From a technical point of view, if the price breaks above the 1.5600, it could rise to the 1.5950 level in a matter of 2 to 3 weeks.
