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Dwindling Rand Rally Favors ‘Buy the Dip’ Motto


RAND ANALYSIS

  • Hawkish feedback halt ZAR energy.
  • USD/ZAR draw back transfer could possibly be tiring.

ZAR FUNDAMENTAL BACKDROP

IS THE RALLY OVER?

The South African rand has flourished towards the U.S. greenback since late November 2021 however this can be coming to an finish with the Federal Reserve including to its alreadyhawkish narrative.With such excessive expectations of the dollar late final 12 months, markets flooded into greenback longs and sadly value motion didn’t observe go well with. With the standard greenback fade over the December/January festive interval repeating itself, the rand latched on and loved the journey.

Remaining because the second finest performing forex towards the U.S. greenback year-to-date (see graphic beneath), the tide could also be altering because the weak South African financial and political backdrop endures.

currencies against USD

Supply: Reuters

Yesterday, the Fed’s Daly talked about the potential for fee hikes to start in March which despatched the greenback larger regardless of preliminary jobless claims knowledge disappointing.

Later at the moment, U.S. retail gross sales and client sentiment are the 2 excessive affect occasions on the financial calendar. Each prints are anticipated decrease than prior however emphasis will likely be given to the inflationary parts of the discharge in costs and inflation expectations respectively.

USD/ZAR ECONOMIC CALENDAR

USDZAR economic calendar

Supply: DailyFX financial calendar

TECHNICAL ANALYSIS

USD/ZAR DAILY CHART

USDZAR daily chart

Chart ready by Warren Venketas, IG

From a technical evaluation standpoint, the day by day chart reads fairly clear with the pullback in USD/ZAR value motion approaching the medium-term channel help (black). Whereas there’s nonetheless room for additional draw back, I imagine this may solely be marginal at finest. The Relative Energy Index (RSI) presently sits near oversold territory, bouncing up off the October help studying round 34. Whereas the rising risk of a bearish crossover on the 20 and 50-day EMA respectively, may recommend additional rand energy to return (short-term).

Resistance ranges:

  • 16.0000
  • 20 and 50-day EMA’s
  • 15.5563 (January swing low)
  • 15.4289 (50% Fibonacci)

Help ranges:

Contact and observe Warren on Twitter: @WVenketas



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