The Malaysian ringgit has fallen to a new four-month low on Tuesday bucking the trend of its regional peers and opening weaker levels on the chart.
The ringgit has dropped more than 3% since reversing the direction from a 10-month peak last month.
This ringgit fall stood apart as Indian rupee, Thai baht, Chinese yuan and Indonesian rupiah had all shown strength against the greenback, which has seen some profit booking near the multi-month high it had touched recently.
The July-August rally was aided by the central bank rate hike in July, but at this month's review the main rate was held steady at 3.25%. Policymakers see domestic demand in Malaysia, the key driver for its economic growth, growing only modestly in the coming quarters.
Malaysia has posted strong growth in the first half of 2014, buoyed by private sector consumption and investment, but the persistent rise in government-guaranteed debt is a concern, Moody's Investors Service said on 17 September.
The market is now waiting for the July unemployment rate, due on 25 September. The unemployment rate has been on a declining trend in Malaysia ever since hitting 3.4% late in October - it came in at 2.8% in June, down from 2.9% in May.
A bounce back in the number will, however, strengthen the case for an extended period of steady rates.
A Bloomberg report on Tuesday showed that Malaysia has been able to keep the high level of sukuk issuance in 2014, suggesting improved outlook for infrastructure spending in the country.
USD/MYR Technical Analysis
The pair has broken above the 50% Fibonacci retracement of the February-August selloff and a decisive closing above that line will lead it to the next level at 3.2758, near the 61.8% line.
A break of that will open the 3.2980-3.3115 region ahead of a retest of the February peak of 3.3515.
With MACD significantly above the zero line, the picture is bullish but the widening of signal line shows that a reversal is possible in the near future, making further highs technically difficult.
On the downside, the pair will have its first target at the 3.2194-3.2163 region, a break of which will significantly weaken the uptrend since August.
Further south, the pair will aim the 23.6% retracement of 3.1897, a break of which will resume the downtrend since February. Then 3.1707 should be a level to watch but the key will be 3.1428, the August low.