The US Dollar made another day higher against the Ringgit on Friday and is now trading at 4.6900. The upward movement comes after the release of data from the Consumer Price Index (CPI) for the USD, which measures the change in the price of goods, products, and services for the final consumer and is the main indicator of inflation in the US. The CPI is important because it is used by the Federal Reserve (FED) to direct its monetary policy and the higher-than-expected reading (8.2% real against 8.1% forecast) shows that there may be an increase in the interest rates for the USD in the short and medium term. Experts are predicting that the interest rate for the USD will be between 4.5% and 4.75% by the end of 2022. As the interest rate is at 3.25% now and there are still 2 Fed meetings (one in November and another in December), it is possible that the increase will be 0.75% in November and 0.75% in December, totalling 4.75% interest rate in 2022. As this is already anticipated by the market, it is possible that a part of this increase is already priced in. From a technical point of view, USDMYR is currently holding a reading of 90.90 on the Relative Strength Index indicator, showing an extreme overbought situation and a breakout below 4.6400 could make room for a more important drop in the coming days.
