USDMYR Technical Analysis

The USDMYR remains directionless on Wednesday and is now trading at 4.6190. As the Federal Reserve (FED) decided to lower the interest rate from 5.25% to 5.0% today, it is possible that the USDMYR will fall this Thursday. The market’s expectation was that the FED would keep the rate unchanged at 5.25%, but that was not what happened. The MYR interest rate is currently at 3%, which makes the differential between the USD and MYR interest rate just 2% positive for the USD. As this difference has been diminishing lately, it could make the USD lose attractiveness in the short and medium term, opening space for a possible appreciation of the MYR over the next few months. The current decrease in the FED’s interest rate also marks an important change in the FED’s stance, which has spent the last 10 meetings gradually raising interest rates. This leaves room for questions about the possibility of the FED continuing to lower the USD interest rate in the next meetings (which is quite unlikely at this moment). From a technical point of view, if USDMYR manages to break below 4.5980, it could drop as low as 4.5250 in a few days.