The USDZAR currency pair has seen significant movements recently, with the South African Rand appreciating against the U.S. Dollar over the past few weeks. This month alone, the Rand has driven a 3.45% decline in the USDZAR, and if this trend continues, it will mark the third consecutive month of the Rand’s strengthening. As the new week begins, the Rand has shown its resilience by marginally gaining against the Greenback, trading 28 basis points lower during the Asian session.
Traders watch the economic calendar keenly for cues that might influence the pair’s trajectory. Key events this week include South Africa’s April inflation rate report and the release of the Federal Reserve’s FOMC Minutes, followed by U.S. PMI data. These reports will offer insights into the monetary policy outlook and the overall health of the U.S. economy.
The Rand’s recent performance highlights its surprising strength, inviting further scrutiny of underlying economic factors and future trends. Will the Rand maintain its momentum, or will the U.S. Dollar stage a comeback?
Technical
The USDZAR currency pair is currently trading in a clear downtrend, firmly positioned below its 100-day moving average, indicating sustained bearish momentum. The descending channel pattern further validates this downward trajectory, formed by four consecutive weeks of losses. After encountering resistance at the 18.29401 level, the pair faced renewed selling pressures following a brief upturn, driving it towards the lower boundary of the descending channel.
Recently, the USDZAR reached a five-month low at 18.10599, a potential key support level. Technical analysis suggests this level is crucial, as oversold conditions in the Relative Strength Index (RSI) are currently prevalent, indicating a possible rebound. Indeed, a slight bounce from this low has been observed, sparking interest among traders. If this upside momentum gains traction, the pair could challenge the 18.29401 resistance level, appealing to traders hopeful for a U.S. Dollar recovery. Conversely, if downside pressures persist, the USDZAR might retest the 18.10599 support level.
Summary
The USDZAR’s descent to a five-month low at 18.10599 spotlights its bearish momentum. Traders now watch whether it can rebound towards the 18.29401 resistance amid oversold RSI conditions or retest the crucial 18.10599 support, influenced by upcoming economic data.
Sources: Observatory For Economic Complex, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
expectations, the retail giant appears well-positioned for the coming months.
Sources: MoneyWeb; News24; SABC News.
Piece written by Trive Sales Trader, Kealeboga Molefe
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