The Malaysian ringgit weakened in Thursday’s Asian session as the US dollar firmed and US Treasury yields rose following the FOMC. USD/MYR briefly traded above 4.10 in what was described as an orderly move, with no indication of Malaysia-specific stress. Pressure later eased as the dollar and Treasury yields retreated from their highs and oil prices pulled back.
Near-term trading is expected to remain cautious if US Treasury yields and the dollar strengthen again. Technical conditions point to bullish daily momentum, but the RSI has moved into overbought territory, suggesting limited upside follow-through could push USD/MYR lower and close the earlier post-holiday gap. Key support is seen at 4.0870 and 4.0730, the latter aligned with the 50 DMA, while resistance sits at 4.10 and 4.12.
Technical Set-Up And Trading Strategies
We suggest derivative traders prepare for a tactical reversal in USD/MYR as the pair’s recent spike looks technically overstretched. The daily Relative Strength Index (RSI) has pushed deep into overbought territory, signaling that the US dollar’s surge is losing momentum. We recommend establishing short USD/MYR positions or buying MYR call options near the current 4.10 resistance level.
Domestic Drivers And Risk Management
Our bearish outlook on USD/MYR is heavily supported by Malaysia’s solid economic data, including a robust 5.9% GDP expansion earlier in this cycle and steady retail sales. Additionally, Bank Negara Malaysia’s decision to maintain its benchmark interest rate at 3.00% provides a highly supportive yield environment. These strong domestic drivers should assist the ringgit in regaining its footing as global bond yields stabilize.
For active traders, we advise setting profit targets near the immediate support levels of 4.0870 and 4.0730. To mitigate risk, tight stop-loss orders should be placed just above the key resistance hurdles at 4.10 and 4.12. If the US dollar fails to find follow-through buying, we anticipate a quick move to fill the recent post-holiday chart gap.
