USD/ZAR - Staying Long
USD / ZAR is currently at a pivotal moment concerning the continuation of being range bound since 2011. The outcome can be one of two possibilities:
- A break out to the top side from the existing long term resistance, which would lead to severe depreciation of the South African Rand.
- The long term resistance holds at R12.50 which would likely lead to short term relief to R12.00
It's very important to realise that a dip from here could potentially be one of the few remaining long buying opportunities before the US Federal Reserve raises rates, resulting in further Rand weakness.
Key risks going forward:
- Negative ratings agency views in June by S&P.
- Leadership turmoil concerning state owned power producer Eskom.
- Potential imminent labour strikes which will reduce already dwindling GDP growth.
I personally see no reason to hold the Rand at any level below R11.90 because the potential upside by the end of the year could be in excess of 10% to 15% should the channel be broken with no fundamentals.
- A break out to the top side from the existing long term resistance, which would lead to severe depreciation of the South African Rand.
- The long term resistance holds at R12.50 which would likely lead to short term relief to R12.00
It's very important to realise that a dip from here could potentially be one of the few remaining long buying opportunities before the US Federal Reserve raises rates, resulting in further Rand weakness.
Key risks going forward:
- Negative ratings agency views in June by S&P.
- Leadership turmoil concerning state owned power producer Eskom.
- Potential imminent labour strikes which will reduce already dwindling GDP growth.
I personally see no reason to hold the Rand at any level below R11.90 because the potential upside by the end of the year could be in excess of 10% to 15% should the channel be broken with no fundamentals.
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