Rand price forecasts: USD/ZAR, EUR/ZAR and GBP/ZAR oversold

The rand has started to recover from its worst levels against majors: the dollar, euro and British pound. The short term move serves as a correction from severely oversold levels, as global risk appetite improves post resolve on the US debt ceiling debacle and the expectation that the Federal Reserve will pause their hiking cycle at the upcoming open market committee (FOMC) meeting.

The rand does however continue to deal with a plethora of challenges domestically, ranging from the recent greylisting, the enormous burden of State-Owned Entities (SOEs) on the country’s fiscus, increased vulnerability in diplomatic ties, fragile economic growth and an escalating power crisis. These matters are unlikely to resolve soon and could equate to the ZAR’s longer term trend of depreciation resuming in the not to distant future.

USD/ZAR – technical view

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 recent break of resistance at 19.50 yielded a high of 19.90, although short of the 20.20 channel resistance target.

Currently we see the currency pair pulling back from what was overbought territory. The pullback serves as a short-term correction of the longer-term uptrend, with the price now moving towards the 19.00 support level and into oversold territory.

Trend followers would prefer to keep a long bias to trades on the USD/ZAR, looking for a bullish price reversal at the current (19.00) or lower labelled support levels for long entry. This is provided that the pullback does not extend deep enough to break channel support and that of the 200MA.

Should the bullish reversal scenario manifest, we will update guidance with targets and failure levels.

EUR/ZAR – technical view

The EUR/ZAR also remains in a long-term uptrend (Euro strength / rand weakness) as the price trades above our long-term trend line and firmly above the 200-day simple moving average (200MA) (blue line).

Currently we see the currency pair pulling back from recent highs. The pullback serves as a short-term correction of the longer-term uptrend, with the price now moving towards a confluence of support (trend line and horizontal) at the 20.35 level.

Trend followers would prefer to keep a long bias to trades on the EUR/ZAR , looking for a bullish price reversal at the current (20.35) or 20.05 for long entry.

Should the bullish reversal scenario manifest, we will update guidance with targets and failure levels.

GBP/ZAR – technical view

The GBP/ZAR also remains in a long-term uptrend (British pound strength / rand weakness) as the price trades above our long-term trend line and firmly above the 200-day simple moving average (200MA) (blue line).

Currently we see the currency pair pulling back from recent highs. The pullback serves as a short-term correction of the longer-term uptrend, with the price now testing support (trend line and horizontal) at the 23.70 level.

Trend followers would prefer to keep a long bias to trades on the GBP/ZAR, looking for a bullish price reversal at current (23.70) or one of the lower support levels labelled on the chart above.

Should the bullish reversal scenario manifest, we will update guidance with targets and failure levels.