USD/ZAR ANALYSISFinancial rebound anticipated by analystsFalling wedge triangle sample lingers RAND WEAKENS AGAINST FIRMING DOLLA
USD/ZAR ANALYSIS
- Financial rebound anticipated by analysts
- Falling wedge triangle sample lingers
RAND WEAKENS AGAINST FIRMING DOLLAR
The announcement by President Cyril Ramaphosa to lockdown sure areas (termed ‘hotspot areas”) inside South Africa has aided the short-term upward bias. The Rand remains to be within the inexperienced towards the US Greenback for December which falls in step with historic worth motion throughout this era.
With present vaccine positivity, the Rand might expertise additional help by way of international risk-on sentiment which has been overwhelming influencing issue within the midst of COVID-19.
STAGGERING SA Q3 GDP FORECASTED FIGURES ENOUGH TO GARNER CONFIDENCE?
All eyes might be on the South African Q3 GDP knowledge tomorrow (09:30GMT) which is estimated at 57.1% annualized (QoQ). This headlined determine could seem excessive however on the again of the dismal Q2 knowledge – which projected the economic system contracting by over 50% as a result of international COVID-19 pandemic – this rebound was predictable. Many analysts foresee precise figures exceeding the listed 57.1% determine which may have a constructive impact the native foreign money.
Underlying and protracted financial points could also be overshadowed by the outlandish GDP figures however it’s a matter of ‘when’ not ‘if’ the headwinds going through the South African economic system are uncovered inside the foreign money.
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USD/ZAR DAILY CHART
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Previous to final week Non-Farm Payroll (NFP) knowledge, the Rand clawed again a lot of its misplaced beneficial properties towards the dollar. This was not sufficient to interrupt beneath the falling wedge help line (black) or the November swing low at 15.0980. Quick-term worth motion follows an uptrend with bulls eyeing the wedges topside resistance trendline. This triangle sample stays vital within the medium-term outlook which may result in a serious reversal to the upside.
The Relative Power Index (RSI) continues to exhibit upward momentum nonetheless, general momentum stays bearish. USD/ZAR bulls might be monitoring the potential for a breakout with targets at 15.5000 and 15.7357 respectively.
The bearish case might collect some help from upcoming South African GDP figures which may see a consequent downward transfer towards 15.0980. Whatever the directional motion, the falling wedge pays a essential function in figuring out the medium time period outlook for the Rand as a break above or beneath may arrange worth motion for 2021.
The US Greenback Index (DXY) has moved out of oversold territory which may sign additional power to come back in December. There are a lot of conflicting basic elements at play however which is able to dominate as we shut out 2020?
USD/ZAR: KEY POINTS TO CONSIDER MOVING FORWARD
- Falling wedge triangle sample
- Greenback power
- SA Q3 GDP
— Written by Warren Venketas for DailyFX.com
Contact and comply with Warren on Twitter: @WVenketas