The USD/MYR currency pair settled below recent high of 4.2240, its strongest level since September 5th, after US PCE inflation data met expectations and reinforced bets that the Federal Reserve could ease policy further this year.

Annual core PCE inflation has remained steady at 2.9% in August, while annual PCE inflation has accelerated to 2.7% from 2.6% in July.

Markets are now pricing in about an 85% chance of a 25 basis point Fed rate cut in October and a 33% chance of another 25 bps cut in December.

The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.

Federal Reserve Chair Jerome Powell said this week the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.

“USD solidly back in range but less risk of disorderly unwind of shorts, based on positioning,” Bank of America analysts wrote in a note to clients.

“Pivotal jobs report ahead. Few near-term narratives to support rest of G10.”

On the global trade front, US President Donald Trump announced a new round of tariffs on imported drugs, trucks and furniture, which will take effect on October 1st.

The exotic Forex pair gained 0.36% for the week.