OCBC strategists Sim Moh Siong and Christopher Wong highlight that Malaysian Ringgit (MYR) has softened despite supportive domestic data, as Fed-led hawkish repricing keeps US Treasury yields and the US Dollar (USD) firm. Softer Oil offers only a buffer rather than a catalyst. They expect USD/MYR to remain better supported near term unless US yields ease decisively or broader USD strength fades.

External drivers dominate MYR

"MYR ended last week on a much softer footing, with USD/MYR pushing up towards the 4.14 handle (at one point last week) as broad USD strength continued to weigh."

"Supportive domestic data, including firmer trade prints and contained inflation, did little to offset, suggesting that external drivers remain the bigger swing factor for now. Fed-led hawkish repricing has kept US Treasury yields and the USD supported."

"This week, MYR may still trade cautiously. Softer oil is a useful buffer, especially as it eases some pressure on the fiscal/subsidy narrative and provides relief for risk sentiment."

"But this is more of a cushion than a clear positive catalyst if USD momentum stays firm. Domestic fundamentals remain broadly intact, though the earlier MYR re-rating looks largely reflected in price. "

"Near term, USD/MYR may stay better supported unless US Treasury yields ease more decisively or the broader USD bid fades."

"Pair last closed at 4.1360. Bullish momentum on daily chart intact while RSI rose into overbought conditions. Bias remains skewed to the upside."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)