The USD/MYR has produced some upwards price dynamics since yesterday, and is traversing near values seen last week as resistance levels come into focus and sentiment is questioned by traders.
The USD/MYR as of this writing is near the 4.4350 ratio which is a near-term high, this after the currency pair fell from the 4.4750 vicinity on Monday the 2nd of December and touched a low of nearly 4.4110 last Friday. Trading this week in the USD/MYR has been able to sustain lower ground, but has exhibited some nervous buying yesterday and early today.
Yesterday’s inflation numbers from the U.S met expectations and now financial institutions must brace for the U.S Federal Reserve’s FOMC Statement, which will include its interest rate decision. The USD/MYR has been correlating well to the broad Forex market and the slight buying of the currency pair yesterday and today has been calm.
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Central Bank Clues and USD/MYR Speculation
The European Central Bank will announce their Main Refinancing Rate today. While some traders may scratch their heads and wonder what that has to do with the USD/MYR, they should remember the ECB doesn’t move by itself, it takes potential U.S Federal Reserve interest rate decisions into consideration. Meaning that if the ECB cuts today by 0.25 this likely reflects a healthy notion that the Fed will also cut its interest rate by 0.25 next week. But the key clue may come from rhetoric the ECB pronounces today, unfortunately the ECB is notoriously cautious and they will be today.
An interest rate cut by the Fed next week has already been factored into the USD/MYR by financial institutions. The recent ability to provide some lower momentum since early December was actually a sign that large commercial traders were less nervous about their mid-term outlooks. The slight trickle higher in the USD/MYR yesterday and today is a normal reaction to the selling that took place. Now resistance levels will become a factor for day traders in the near-term.
Speculative Selling and Interpreting Nervous Sentiment
The slight buying seen yesterday and today may feel like a good place to test the attitudes of financial institutions. The USD/MYR has suffered a strong bullish run since late September, only in the past week and a half has Forex started to become more tranquil. Traders who feel like the USD/MYR is still in overbought territory may be proven right, but timing the exact momentum a sustained trend lower will occur remains difficult.
- Looking for speculative selling positions when short-term resistance levels are perceived may be an interesting wager today and tomorrow.
- However, traders also need to keep in mind that the U.S Federal Reserve rate decision next week and its outlook are on the minds of financial institutions, and until then the USD/MYR will likely remain choppy.
- If the USD/MYR remains under the 4.4400 level this may be interpreted as bearish sentiment.
USD/MYR Short Term Outlook:
Current Resistance: 4.4390
Current Support: 4.4310
High Target: 4.4480
Low Target: 4.4220
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