ZAR was pushed up by the weaker US dollar, but downside risk remains

USD / ZAR analysis:

  • weak U.S. dollar Supports the strength of recent ZAR
  • strong USD / ZAR Patterns appearing on daily charts

South African Rand posted one of the most impressive performances compared to Emerging Markets (EM) currencies. U.S. dollar However, I’ve seen this slide in the last few weeks.

The rand is actually trading at about -0.3% against the dollar since the beginning of the year, and even if the weak dollar turns out to be fairly short-term in nature, the weak dollar trades in the ZAR positive territory. May help back.

Global currency and US dollar

Created chart Richard Snow, Reuters

The dollar is currently full of uncertainty as US inflation continues to rise, but at the same time retail sales data for September is expected to be negative. The slump in the labor market is expected to be 500,000, compared to 194,000 additional jobs in September while the Federal Reserve was looking for reasons to reduce stimulating spending programs. With the addition, it further strengthens the uneven economic recovery.

Tomorrow will lead the first reading of US retail sales data and Michigan consumer sentiment for September. Disappointing data prints may not be as important here, as the main focus is on changes in inflation, the labor market, and the probability of taper.

Major risk events in USD / ZAR this week

dailyfxecon calendar

USD / ZAR, DXY Technical Analysis and Key Levels

Net importer oil In emerging markets Oil price And the strong dollar continues to weigh on consumer and local economic recovery.

The recent depreciation of the dollar is unlikely to make a big difference to South African fuel pumps, much larger and more sustainable pullbacks are needed. The chart below shows a basket of dollars and major currencies. This typically serves as a benchmark for US dollar performance.

There has been a sharp rise recently, which may eventually settle to 9345 (near the previous high), but current market sentiment will somehow taper or taper early by the end of the year. We have confirmed that it remains vulnerable to continued bullishness. next year.

US dollar index (daily chart)

US dollar index.

Created chart Richard Snow, IG

As price behavior approached many levels, the ZAR was significantly strengthened from its September highs around 15.25. support And now I’m wrestling with level 14.73. The strength of the continuous ZAR witnesses a 14.63 level test. This is a 38.2% fib of a bullish reversal from the June lows to the August highs.

However, it does reveal what the price action looks like Bull flagAgain suggests the ZAR vulnerability and migration to 15.00. Keeping the bullish story requires a decisive bounce from the band under the bullish flag. Support zone (Red) And over 15.00 breaks, a bullish flag and momentum continue.

USD / ZAR (((Daily chart).

USD / ZAR daily chart

Created chart Richard Snow, IG

Read a comprehensive article Education Division For more information on Bull Flag and other important technical insights

— Written by Richard Snow for

Contact Richard on Twitter to follow us. @RichardSNSowFX

ZAR was pushed up by the weaker US dollar, but downside risk remains

Source link ZAR was pushed up by the weaker US dollar, but downside risk remains

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