USDMYR Technical Analysis

The US Dollar gains some strength but maintains the slow behaviour against the Ringgit on Wednesday, reflecting the market’s concern regarding the interest rate decision for the USD tomorrow. The USDMYR is trading at 4.4260. The release of annualized inflation data in the US came in lower than expected (7.1% real against 7.3% forecast) and this shows that the measures adopted by the Federal Reserve (FED) have been effective in controlling the prices of goods and services consumed in the US economy. On the other hand, the decrease in inflation also sends a clear message to investors that perhaps the FED will not have to act as incisively over the next year, so the FED may adopt a more dovish tone throughout 2023. The consequences of a more flexible stance on the part of the FED could make the interest rates fall; This could cause a possible devaluation of the USD against its counterparts. From a technical point of view, USDMYR is in an important support region and an upward move towards the 4.4800 region could happen over the next few days. Investors should be careful because the most important element remains tomorrow’s interest rate decision.