The ringgit strengthened to RM4.12 against the US dollar after briefly weakening earlier in the week, supported by improving risk sentiment and easing demand for the greenback, according to Kenanga Research.
The local currency recovered from Monday’s high of RM4.15 per US dollar as concerns over geopolitical tensions eased and market volatility stabilised.
Kenanga Research said the earlier weakness was driven by hawkish signals from the US Federal Reserve and expectations that US interest rates could remain elevated for longer.
“The ringgit later recovered as equity volatility eased and concerns over disruptions to the Strait of Hormuz declined,” the research house said in its latest currency outlook.
Lower crude oil prices also helped reduce market concerns, with Brent crude falling below US$75 per barrel as steady oil shipments signalled reduced geopolitical risk premiums.
However, the research house noted that elevated US Treasury yields continued to provide support for the US dollar, with foreign exchange positioning remaining moderately favourable towards the greenback ahead of key US labour market data.
Markets are expected to closely monitor the upcoming US labour market report, as investors assess whether employment conditions remain strong enough to support the Federal Reserve’s more hawkish policy outlook into 2026.
Kenanga Research said a weaker-than-expected jobs report could challenge expectations of further monetary tightening and reduce recent US dollar strength.
Investors will also watch developments surrounding the Strait of Hormuz, a key global oil transit route, as any renewed disruption could trigger safe-haven demand for the US dollar and pressure emerging market currencies.
The house expects the US-Iran ceasefire framework to remain broadly intact, allowing oil flows through the Strait of Hormuz to continue without major disruption.
Under this scenario, lower oil prices and easing geopolitical risks could limit further gains in the US dollar, while investors reassess whether current hawkish Federal Reserve pricing has become excessive.
“We expect USDMYR to trade within the 4.08 to 4.12 range, with risks tilted towards gradual MYR appreciation as the current USD rally approaches its peak,” it said.
From a technical perspective, USDMYR has shifted into a neutral trend, with immediate resistance seen at 4.13. Support levels are identified at 4.09 and 4.07.
