Rand price forecast: USD/ZAR pullback deepens but longer term uptrend remains
Since reaching its worst levels against the US dollar on the 1st of June 2023, the rand has managed to appreciate roughly 8%, but key data awaits and the long term trend remains that of depreciation.
The USD/ZAR remains in a long-term uptrend (dollar strength / rand weakness) as the price trades within the upward channel and firmly above the 200-day simple moving average (200MA) (blue line).
The currency pair continues to pullback in the short term and is now breaking the 18.40 support level and trading deep within oversold territory.
Trend followers might prefer to keep a long bias to trades on the USD/ZAR, looking for a bullish price reversal from current or off one of the lower labelled support levels for entry. Ideally, we would like to see a price reversal accompanied by a move out of oversold territory as well.
Only on a move below the 200MA (blue line), channel support and the 17.70 level would we look to reassess the currently assumed long bias to trades on the USD/ZAR.
Key data to watch
Among the key upcoming data points both local and from the US which could impact short term movements on the currency pair over the remainder of this week are as follows:
- 8pm Wednesday 14 June, Federal Funds Rate decision and policy statement
- 2:30pm Thursday 15 June, US Retail and Core Retail sales, Weekly Unemployment Claims and Empire State Manufacturing Index data
- 4pm Friday 16 June, UoM Consumer Sentiment data (US)
IG client sentiment
As of the 14th of June 2023, most IG clients (67%) with open positions on the USD/ZAR are short, while 33% of IG clients with open positions are long.
It should be noted that traders of currency pairs such as the USD/ZAR might not all be speculating on directional movements but could also be hedging underlying currency risks.
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