The South African Rand (ZAR) started Thursday on a firmer footing, trading around 18.67 against the US Dollar (USD), recouping some of its early-year losses against the greenback. This slight rebound comes after a choppy week dominated by elevated US Treasury yields and a cautious risk-off sentiment. Investors remain apprehensive, awaiting crucial US data, including the NFP report due on Friday, for clues about the Fed’s potential future rate-cut trajectory.
While elevated US treasury yields and cautious risk sentiment continue to buoy the greenback, whispers of a potential peak in South African interest rates and a cooling December PMI reading are injecting some optimism into the Rand’s veins.
Technical
The 4-hour chart paints a mixed picture. The USDZAR currently stands at R18.61889, depicting a downward trend during the session as the Rand attempts to recover. Price action remains slightly above key SMAs [20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line)], suggesting an overall potential bullish bias. The sharply falling RSI suggests potential bearish momentum, while the upward-sloping RSI-based MA indicates possible price stability.
Short-term opportunities could emerge towards the R18.52407 support level, potentially driven by renewed dollar weakness. A successful break below the SMAs could see the price action potentially slide towards the R18.42178 and R18.24984 zones. Conversely, short-term trading opportunities could exist towards the resistance level at the R18.83311 price level should the price action fail to break below the SMAs. A break above the initial resistance could confirm the bullish momentum, likely bringing the resistance at R18.98328 into play.
Summary
The Rand’s rebound is a welcome sight, but navigating the technical maze remains challenging. Bulls face an uphill battle against the strong bearish pressure and potential profit-taking. While short-term opportunities exist in both directions, a clear trend might not emerge until the market digests the upcoming US data, including the PMIs data, jobs data, and the global risk landscape clarifies.
Sources: TradingView, Trading Economics, Federal Reserve, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
