USD/ZAR pre SA GDP print
Updated
The rand has now posted convincing gains in the past three sessions off the back of an increase in global investor risk appetite following a strong US NFP’s print on Friday and the conclusion of the US debt ceiling debacle. An ABC corrective pattern seems to be the most likely move for the pair at the moment as per my previous idea linked below. The rand has managed to pull the pair into the first support range (S1 on the chart) and the 23.6% Fibonacci retracement level is now firmly in the rand’s crosshairs. A break below S1 will allow the rand to pull the pair onto the psychological rate of 19.00. The rate at 19.00 is will probably show some strength but I expect the rand to pull the pair lower onto the 50-day MA rate of 18.64 which coincides with the 38.2% Fibonacci retracement level and the bottom of the current upward channel.
Looking at the fundamentals there is not much supporting the rand but the expected increase in debt issuance from the US following the raising of the debt ceiling will allow risk assets such as the rand to soak up some fresh dollar bills. The 1Q2023 South African GDP results will be released tomorrow and expectations are for a year-on-year 2.2% growth print, up from the disappointing results of 0.9% in the 4Q2022. A print in line or higher than expectations will boost the heavily oversold rand, but we’ll have to wait and see how the SA economy fared given the low electricity supply in the 1H2023.
In terms of the technical indicators, there is a cross over sell signal on the daily MACD and the RSI is trending lower with plenty of room to drop before hitting oversold levels.
Looking at the fundamentals there is not much supporting the rand but the expected increase in debt issuance from the US following the raising of the debt ceiling will allow risk assets such as the rand to soak up some fresh dollar bills. The 1Q2023 South African GDP results will be released tomorrow and expectations are for a year-on-year 2.2% growth print, up from the disappointing results of 0.9% in the 4Q2022. A print in line or higher than expectations will boost the heavily oversold rand, but we’ll have to wait and see how the SA economy fared given the low electricity supply in the 1H2023.
In terms of the technical indicators, there is a cross over sell signal on the daily MACD and the RSI is trending lower with plenty of room to drop before hitting oversold levels.
Note
Rand gaining some serious momentum. Test of the 19.00 level looking likely in today's sessionNote
19.00 broke, pair is now approaching zone S2.Note
Wave A onto the 50-day MA has been completed. I'm expecting strong support in zone S2. The pair is currently testing this support zone which coincides with the bottom of the current blue upward channel.
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