Fxequity

Dwindling Rand Rally Favors ‘Purchase the Dip’ Motto


RAND ANALYSIS

  • Hawkish feedback halt ZAR power.
  • USD/ZAR draw back transfer may very well be tiring.

ZAR FUNDAMENTAL BACKDROP

IS THE RALLY OVER?

The South African rand has flourished towards the U.S. dollar 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 yr, markets flooded into greenback longs and sadly value motion didn’t comply with go well with. With the normal greenback fade over the December/January festive interval repeating itself, the rand latched on and loved the journey.

Remaining because the second finest performing foreign money towards the U.S. dollar year-to-date (see graphic under), 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 increased regardless of preliminary jobless claims information disappointing.

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

USD/ZAR ECONOMIC CALENDAR

USDZAR economic calendar

Supply: DailyFX economic calendar

TECHNICAL ANALYSIS

USD/ZAR DAILY CHART

USDZAR daily chart

Chart ready by Warren Venketas, IG

From a technical evaluation perspective, the each day chart reads fairly clear with the pullback in USD/ZAR value motion approaching the medium-term channel help (black). Whereas there may be nonetheless room for additional draw back, I imagine this can solely be marginal at finest. The Relative Strength Index (RSI) at present 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 power 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 comply with Warren on Twitter: @WVenketas





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