SA Rand Pulling Again After Hawkish Fed Scare

RAND ANALYSIS

• Rand resumes week within the inexperienced
• USD/ZAR testing long-term resistance

SOUTH AFRICAN RAND FALLS FROM BEST PERFORMING CURRENCY VS U.S. DOLLAR YTD

Final week the South African rand didn’t react nicely to the Federal Reserve’s dot plot adjustment message. This week, the native foreign money pushed again making an attempt to get better misplaced positive factors. The result’s obvious from the picture chart under which reveals the rand slipping from the very best performing foreign money in opposition to the greenback in 2021 to 3rd place behind the Ukrainian hryvnia and Canadian greenback respectively – a title it has held for many of 2021.

Supply: Reuters

QUESTION MARKS AROUND REFLATION TRADE SURPRESSING ZAR

With U.S. inflation considerations comparatively dissipating, South African linked commodity costs corresponding to iron ore, platinum and gold have been considerably declining post-FOMC which has endured this week. These weaker commodity costs have a unfavourable influence on rand power which may hinder additional rand positive factors.

Following on with the inflation dialogue, South African CPI (Could) will likely be scheduled on 23, June 21, 2021 at an estimated determine at 5.2% up from 4.4% prior (see calendar under). As well as, key danger bulletins from the U.S. will likely be watched fastidiously with a number of excessive influence occasions anticipated all through the week.

Financial Calendar:

Supply: Refinitiv

RAND TECHNICAL ANALYSIS

USD/ZAR Weekly Chart:

Chart ready by Warren Venketas, IG

The weekly USD/ZAR chart above provides a transparent long-term image of the robust downtrend starting in 2020. Since then, a formidable trendline resistance (black) has shaped which is being examined this week. The 20-day EMA (purple) coincides with this stage together with the 61.8% Fibonacci zone at 14.5030. A affirmation weekly shut above these ranges may spark a bullish run towards the 15.0000 psychological stage.

USD/ZAR Every day Chart:

Chart ready by Warren Venketas, IG

Centering on the each day chart, it’s evident simply how substantial final weeks rally was by the steep accumulation of each day candles. Breaking by a number of key ranges, USD/ZAR has discovered resistance on the aforementioned weekly trendline (black). On the each day chart, the 100-day EMA (yellow) is now offering short-term help.

The Relative Energy Index (RSI) can be vastly totally different from earlier evaluation which has swiftly risen to the overbought area. This might level to a near-term pullback by rand bulls, which can see bears on the lookout for preliminary help on the earlier swing excessive at 14.1998, after which 14.0000 space of confluence will likely be again in focus.

Bulls will likely be ready for affirmation of a trendline break to push towards 14.5000 and subsequently 15.0000.

— Written by Warren Venketas for DailyFX.com

Contact and observe Warren on Twitter: @WVenketas