More upside for ringgit vs US dollar

 

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THE ringgit has been on the strengthening trend the past week, standing tall against the greenback amid renewed buying interest after undergoing a period of consolidation.

It has been on the uptrend following a hawkish comment from policymakers saying they will review the current degree of monetary accommodation, given the strength of the global and domestic macroeconomic condition despite keeping the overnight policy rate (OPR) unchanged at 3% at its eight straight meeting last Thursday.

The recent rally in crude oil prices further boost investors' appetite for the ringgit while the US dollar was becoming more volatile awaiting for an outcome of the proposed tax reforms in the US.

Based on the US dollar/Malaysian ringgit FX Spot Rate daily bar chart, the greenback opened at 4.1900 and quickly slipped below the recent ebb of 4.1800 to touch a low of 4.1780 in early session, the worst level since Nov 9, last year before trimming losses slightly later.

At noon, the ringgit was traded at 4.183 against the greenback.  

The immediate support floor for the US dollar is seen at the 4.1750, of which another negative breakdown from here will probably drag the greenback to the next lower support of 4.143.

When that happens, the stronger floors of 4.097 and 4.010 will become vulnerable.

Elsewhere, the daily slow-stochastic momentum index has triggered a short-term buy signal deep in the oversold area, but it could not be confirmed yet, as both the oscillators were still flirting at the bearish zone.

Though the 14-day relative strength index had reached the bottom, it shows no sign of turning up just yet.

Meanwhile, the daily moving average convergence/divergence histogram expanded negatively against the daily signal line to keep the sell call.

In addition, the "dead cross" of all the simple moving average (SMA) lines, namely the 14-day, the 21-day, the 50-day, the 100-day and the 200-day, were almost in place, implying the outlook for the US dollar is not appearing good.

This may mean that the ringgit is poised to sustain appreciation, albeit on a gradual pace in the immediate term, if not for the longer term.