Why is the ringgit expected to trend downward next week?

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The Ringgit is Expected to Trend Downward Against the US Dollar Next Week Due to a Lack of Catalysts and Global Economic Concerns

The Malaysian ringgit is anticipated to weaken against the US dollar in the upcoming week, primarily driven by a scarcity of positive catalysts and prevailing global economic uncertainties. Several factors are currently perceived to be dampening the momentum of economic recovery. Market sentiment is largely dominated by concerns surrounding the US Federal Reserve's potential monetary policy tightening measures, which are influencing investor behaviour and currency valuations. This global risk-off sentiment, characterized by declining equities and lower US Treasury yields, suggests a move towards safer assets, thereby strengthening the US dollar.
Global Economic Uncertainty and Investor Sentiment

Market participants are closely monitoring the US Federal Reserve's actions regarding monetary policy. The prospect of aggressive tightening in the United States is expected to be a dominant factor shaping market sentiment in the week ahead. This concern is amplified by a broader global trend where equities have experienced significant declines, and 10-year US Treasury yields have fallen below the 3% mark. Such movements indicate that investors are actively seeking refuge from market volatility, often by moving capital into perceived safe-haven assets, which typically includes the US dollar.
Technical Indicators and Currency Levels

From a technical perspective, the US dollar-ringgit pair currently appears to be in oversold territory. This condition, as suggested by technical indicators, might hint at the possibility of a correction. However, this potential for a rebound is overshadowed by the prevailing macroeconomic concerns. The ringgit's immediate resistance level against the US dollar is positioned at RM4.447, while its support level is identified at RM4.340. Despite the technical signals, the overarching sentiment driven by global monetary policy expectations is likely to exert downward pressure on the local currency.
Ringgit's Performance and Broader Currency Trends

The ringgit's recent performance reflects the broader trend of currency depreciation against the strengthening US dollar. On a weekly basis, the ringgit closed lower against the US dollar, trading at 4.3980/3995 compared to 4.3650/3680 in the preceding week. This movement is consistent with other regional currencies, as noted by Bank Negara Malaysia. The increase in the Volatility Index (VIX) further contributes to a stronger US dollar, as it often correlates with increased market uncertainty and a subsequent appreciation of the greenback against other currencies.

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Why is the ringgit expected to trend downward next week?

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