Last week, the USD/RM finally violated the RM3.17/USD critical support level. As there were previously a few rounds of rather strong rebound off the RM3.17/USD level during 1H10, a break below this level technically implies that the currency has great tendency to depreciate further. This means that the odds are high that the USD/RM would depreciate further to the RM3.13/USD level, or the lowest point for the USD/RM market, since the adoption of a managed-float system for the RM.
The mid-term technical outlook of USD/RM is firmly bearish. From the above daily chart, we can see that the USD/RM is depreciating steadily within a downtrend channel. Technically, the mid-term technical outlook of the currency is relatively straightforward. The USD/RM will continue to depreciate until the downtrend channel is violated.
The RM3.17/USD level has now become a tough resistance while next resistance is seen at the RM3.24/USD level. To the downside, the next critical support would be the RM3.13/USD level. Beyond RM3.13/USD is uncharted territory for the currency market since the adoption of a managedfloat system.