Malaysian Ringgit Outlook: USD/MYR Bearish or Bottom?

Malaysian Ringgit exchange rate forecast versus the US dollar is bullish, and there is a high probability of USD/MYR moving towards $3.70. The currency appreciated lately Vs USD, as the latter one seems to be struggling to find a reason to move higher against MYR. Today, Malaysia’s CPI report was released, which missed the mark and putting some pressure on the currency in the short term.

If we have a good look at the daily chart of the USD/MYR pair, then a clear downtrend is visible. The pair started to move down after setting a top near the $4.40 levels. However, a question which may arise now is whether the pair has bottomed or can it continue to trade lower?

Malaysian Ringgit exchange rate to move down versus US dollar?

The Daily chart of the USD/MYR chart clearly points towards a solid bearish trend, and calling for more losses in the near future. However, there is a major support area at $3.70 where the US Dollar buyers may take a stand and push prices higher.

There was a monster support area at $4.10, which was broken in March 2016, opening the doors for more downsides. Currently, there is a bearish trend line formed on the daily chart of USD to MYR, which may continue to act as a barrier for the upside move.

Selling rallies remain a good deal in USD/MYR as long as the trend line resistance holds, as I think the pair may test $3.70 and then form a medium term bottom. So, in short the pair is bearish until it bottoms out at $3.70. If we consider the trend for the US Dollar, then the greenback is under pressure against other currencies as well like the Euro, British Pound, Indian Rupee, Japanese Yen and New Zealand Dollar.

USD/MYR and Malaysia’s CPI for March 2016

The Malaysian Consumer Price Index (CPI) report was released by the Department Of Statistics Malaysia.  The forecast was slated for an increase of 3.6% in the price of goods and services in March 2016, compared with the same month a year ago. However, the outcome was on the lower side, as Malaysia’s CPI rose 2.6%.

The report published stated that major contributors in the CPI rise were “Alcoholic Beverages & Tobacco by 22.7 per cent; Miscellaneous Goods & Services (+5.1 per cent); Food & Non-Alcoholic Beverages (+5.0 per cent); Furnishing, Household Equipment & Routine Household Maintenance (+4.7 per cent); Restaurants & Hotels (+4.5 per cent); and Health (+4.2 per cent)”.

Source – Department Of Statistics Malaysia

The result was definitely not what analysts were expecting, which may put some pressure on Malaysian Ringgit Vs the US Dollar. There is a chance of a minor upside move in USD/MYR, but overall, I think there is a chance of one final push towards $3.70 before the pair starts a major recovery.

In the US, there is hardly any market moving event this week except the Manufacturing Purchasing Managers Index (PMI), which will be published by the Markit Economics on Friday and forecasted to increase to 52.0 in April 2016.

USD/MYR Support Levels
$3.80 and $3.70

USD/MYR Resistance Levels
$3.90 and $4.00

Source - fxnewscall

Related - Malaysian Ringgit Forecast: USD/MYR Is All Bearish?