ZAR Price Action Talking Points.
- South African rand continues to show strength with multiple macroeconomic tailwinds supportive
- USD/ZAR Approaching the 200-day moving average after falling below 17.0000
- Possible bullish cross looming for GBP/ZAR
- EUR/NZD trading at monthly lows
- South African inflation data coming soon
- Global markets will be closely watching the upcoming Jackson Hole Symposium.
Enabling market environment for emerging market currencies
The recent South African rand (ZAR) continues to show resilience, spurred by the passage of the COVID-19 drug by U.S. regulators. Risk-seeking investors rejoice, as Emerging market (EM) currencies There had been considerable favourable fluctuations.
Despite swelling virus figures, the South African Government has recently eased the embargo restrictions, and the economy needs assistance sooner rather than later. As a developing country, South Africa may not rebound to pre-pandemic levels as easily as the more developed countries of the world. While stimulus measures are in place, corruption and political instability continue to plague the lives of ordinary citizens.
A strong rand is not doing exporters any favours and this is not good for growth. The support to the local industry has been hit hard due to the slump in manufacturing operations.
As we enter the third quarter, ZAR price movements appear to be due to external global factors – primarily the following factors dollar Puppeteers US elections, Jackson Hole seminar and US-China tensions are in focus on all fronts. These events can have a broad impact on global currencies.ZAR multiples are enjoying the current risk in sentiment, but for how long?
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ZAR technical analysis
USD/ZAR: Daily Chart
Charts and graphs prepared Warren Venketas , IG
With seven straight days of bearish candles in USD/ZAR The price managed to break the 17.0000 point. Psychological aspects with some beliefs. The supporting goals mentioned in my article Previous USD/NZD analysis article Since then, it has reached and exceeded. 200 days. Moving average (MA) (yellow) could provide next level support ahead of target 16.5000. Price is currently trading above the 200-day moving average (MA), which suggests that the long-term trend remains bullish, so a break below would be important as it could point to a shift in long-term momentum.
Traders looking for a short-term reversal could focus on a potential bounce from the 200-day MA line, which could coincide with the oversold area of the 200-day MA line. Relative Strength Index (RSI) Highlighted in blue.
GBP/ZAR: Daily chart
Chart Producer Warren Venketas , IG
GBP/NZD at 22.0903 (23.6% Fibonacci level) is proving to be a support area and the bulls are defending it, as evidenced by today’s move. bottom wick . Highlighted in yellow is the possibility of a bullish cross over the 50-day MA (black) crossing above the 100-day MA (red) in the coming days. Technical analysts see this as a sign of upward momentum.
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If the short-term price action does reverse to the upside, traders will look for resistance at the upward sloping trend line (blue) that forms the medium-term triangle. Alternatively, further downside pressure could see a break below 22.0000 and the subsequent 50-day and 100-day MA lines.
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EUR/ZAR: Daily chart
Charts and graphs prepared Warren Venketas , IG
Like USD/NZD, EUR/NZD also fell below the key level of 20.0000 which overlaps with the 61.8% Fibonacci level. The sharp decline showed strong downward momentum and could continue towards 19.7428 (50% Fibonacci level). A strong upside reversal is unlikely in the short term, so traders looking to go long should remain cautious.
Consumer Price Index and Producer Price Index Highlights .
South Africa’s inflation data for July will be released on Wednesday and Thursday at +2 10:00 GMT and +2 11:30 GMT respectively (see economic calendar above). The data is expected to rise due to less restrictive blocking.ZAR traders will need to watch for any significant deviations from forecasts in the published data, which could affect ZAR price movements.
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Jackson Hole Conference: what to watch?
This Thursday and Friday will be the long-awaited Jackson Hole Symposium, which will bring together economists, the media, financial market participants and United States Government officials to discuss long-term policy issues. This “discussion” may not seem worthy of attention, but past seminars have produced significant applications of policy.
With interest rates the focus of attention around the world, one is likely to consider the low interest rate environment and the stubborn inflation rate that remains subdued. Any change in the current interest rate and inflation outlook could have a systemic impact on financial markets as a whole, including the ZAR crosses, so regular monitoring discussions would be prudent.
ZAR strategy moving forward
The rand remains in a strong position, but upcoming economic data and US influence could provide a catalyst for further downside, or a possible reversal across major currencies if risk aversion sets in. Looking ahead to the next few months, the US elections are expected to bring more. volatile This could lead investors to seek Safe Haven. currency, which could dampen the ZAR’s gains. Key Trading Points to Consider.
- Technical Analysis USD/ZAR: 200-day MA; GBP/ZAR: MA cross; EUR/ZAR: 19.7428 Fibonacci level.
- Local CPI and PPI data
- Jackson Hole Seminar
— By Warren Venketas for DailyFX.com.
Get in touch and follow Warren on Twitter. @WVenketas