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Rand price resumes trend of depreciation ahead of key data

The USD/ZAR price has now rebounded out of oversold territory to align short and longer term trends.

Source: Bloomberg
Forex United States dollar South African rand Currency pair Currency USD/ZAR
Written by: Shaun Murison | Senior Market Analyst, Johannesburg
Publication date:

USD/ZAR – Technical view

Source: IG Charts

The long-term trend for the USD/ZAR remains up (dollar strength / rand weakening). This continues to be evidenced by the price trading firmly above the 200-day simple moving average (200MA) (blue line).

In the short term we have had a correction in price, although this looks to have ended as we move out of what was oversold territory. This is evidenced by the stochastic trading back above the 20 level, after briefly trading below it.

The move out of oversold territory aligns the short-term momentum with the longer-term uptrend. In turn we continue to favour keeping a long bias to trades on the USD/ZAR currency pair.

Source: IG Charts

Circled blue we see a bullish price reversal off the 17.70 support level accompanied by the move out of oversold territory. The 18.00 level which had previously acted as support and now temporary resistance has been broken to the upside.

18.40 becomes the next upside resistance target from the move, a break of which would further favour a retest of the 18.70 level. Traders who are long from the reversal or otherwise, might consider using a close below the 18.00 support level as a trailed stop loss indication for the trade.

IG client sentiment

Source: IG

As of the 6th of April 2023 (2pm), the majority (76%) of IG clients with open positions on the USD/ZAR currency pair are short, while 24% of IG clients with open positions on the currency pair are long.

It should be noted that clients short and long might not necessarily be speculating on near term direction, but also could be hedging underlying assets and the currency risks associated.

Key data to watch

Over the coming days key local and US data points which have the potential to catalyse short term volatility in the USD/ZAR are as follows:

Date Time Region Event Previous

07 April 2023

2:30pm

USD

Average Hourly Earnings m/m

0.20%

07 April 2023

2:30pm

USD

Non-Farm Employment Change

311K

07 April 2023

2:30pm

USD

Unemployment Rate

3.60%

11 April 2023

1:00pm

ZAR

Manufacturing Production & Sales

1.10%

12 April 2023

2:30pm

USD

CPI m/m

0.40%

12 April 2023

2:30pm

USD

CPI y/y

6.00%

12 April 2023

2:30pm

USD

Core CPI m/m

0.50%

12 April 2023

3:00pm

GBP

BoE Gov Bailey Speaks

12 April 2023

8:00pm

USD

FOMC Meeting Minutes

13 April 2023

8:00am

GBP

GDP m/m

0.30%

13 April 2023

11:30am

ZAR

Mining Production and Sales

-1.90%

13 April 2023

2:30pm

USD

Core PPI m/m

0.00%

13 April 2023

2:30pm

USD

PPI m/m

-0.10%

13 April 2023

2:30pm

USD

Unemployment Claims

14 April 2023

2:30pm

USD

Core Retail Sales m/m

-0.10%

14 April 2023

2:30pm

USD

Retail Sales m/m

-0.40%

14 April 2023

4:00pm

USD

Prelim UoM Consumer Sentiment

62

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Clients can lose more than they deposit. All trading involves risk.

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