The EURZAR currency pair has witnessed a noteworthy trajectory, marking a continuous appreciation over the past four years. The new year kicked off on a higher note, showcasing a 1.16% gain already.
This upward trend prompts traders to shift their focus toward upcoming economic releases, particularly crucial data emerging from Europe. Germany, the region’s economic powerhouse, is slated to unveil its latest inflation figures shortly. Expectations hint at a rise in December’s inflation rate to 3.7%, up from November’s 3.2%. If these projections materialize, the Euro could receive a boost, signalling the potential for prolonged higher interest rates. This anticipation aligns with a broader Euro Area trend, potentially amplifying the downward pressure on the South African Rand, painting an intriguing picture for the EURZAR pair.
Technical
The EURZAR pair is witnessing a gradual upward trajectory but seems to grapple with sustaining significant upward momentum. Oscillating around the 100-day moving average, the pair reflects a struggle between buyers and sellers, reflecting a market tug-of-war.
Recent movements formed a support level at 19.85128, attributed partly to oversold RSI conditions. However, the ascent halted near 20.69408, marked by overbought RSI conditions and a historical resistance level dating back to November 2023.
A retracement occurred, finding support at the 61.80% Fibonacci Retracement Golden Ratio, leading to a reversal and a continuation of the upward trend. Should the upside momentum persist, a retest of the 20.69408 level might be on the cards. Conversely, a potential short-term downside could see the 50% level come into play, indicating a point of interest if bearish price action dominates.
Summary
The EURZAR currency pair’s upward momentum is evident amid pivotal economic data in Europe, particularly Germany’s inflation figures, which are expected to surge to 3.7%. This trajectory prompts expectations of extended higher interest rates for the Euro, potentially bolstering the EURZAR’s current trajectory. Technically, the pair navigates critical levels, reflecting a tug-of-war between buyers and sellers, suggesting a potential retest of recent highs.
Sources: Federal Statistical Office, Reuters, TradingView
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