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USDZAR

USDZAR, dailyUSD is in bullish momentum moving toward Resistance level at R18.3042 against the ZAR. The South Africa Rand (ZAR) has been under pressure following hawkish comments from the US Fed officials last week couple with hotter than expected US Producer Inflation figures (PPI) that were released on Thursday. Markets are now anticipating the US Fed to act more at its March 2022 FOMC Interest Rate Decision. The pricing probability of the US Fed interest rate decision has increased to 18.1% for a 50Bps hike vs previously being priced at 9% probability. R18.5638 is a key resistance level.
by Exness_Official
1
Short-term 4H chartThe rand had a tough week at the office last week which saw the local unit depreciate roughly 2.37% against the dollar. Risk-on sentiment gained some enthusiasm following Powell’s speech on Tuesday which hit the right notes regarding the Fed’s self-proclaimed victory over inflation. The sentiment however soured after US CPI numbers for the month of December were revised higher later in the week. The combination of negative local factors and the dampened risk-on sentiment saw the pair break past the critical resistance rate of 17.83 (blue 61.8% Fibo retracement rate) to touch the November 2022 high of 17.95. Tuesday’s US CPI results for January most definitely has market moving potential which could put the rand back on the ropes but there is potential for the rand to attempt to get the pair back below the critical rate of 17.83. The bearish divergence on the 4h RSI and the rising wedge formation is signalling a move lower towards the neckline of the upward channel and the 23.6% Fibo retracement rate at 17.70. I’m planning to drop some sell-limit orders above 17.85 with a take profit area between 17.60 (blue 50% Fibo retracement rate) and 17.70. There is every possibility that the rand could pull the pair as low as the critical support at 17.50 (orange 23.6% Fibo retracement rate as mentioned in previous ideas) depending on how markets digest the latest US CPI results on Tuesday, but I don’t see the rand maintaining rates below 18.00 for too long given the current macro backdrop. A failed break below 17.50 could see the pair climb back to the 2022 highs in the 18.50’s. (I'll post a longer-term daily and weekly timeframe idea during the week. I'm bearish on the rand over the longer-term)
Short
by Goose96
6
Catching pullback zonesThe dollar strength following Friday’s strong non-farm payrolls print continued in yesterday’s session which allowed the USDZAR pair to break through the blue 50% Fibo retracement rate of 17.61. The pair seems to have lost some upward momentum after hitting a high of 17.70. The rate of 17.61 will swing from a resistance to a support and a break below it will allow the rand to pull the pair onto the neckline of the updated green parallel channel and lower towards the orange 23.6% Fibo retracement rate of 17.50 (I’ll drop a daily timeframe in the comments for context) and the green 23.6% Fibo retracement rate of 17.46 (support range 1). Fundamentally there is not much supporting a strong pullback for the rand so the red zone between 17.46 and 17.50 is looking like an attractive buy zone (s1). The January risk-on sentiment was dealt a reality check last week which has seen dollar strengthen across the board and US equity markets are looking poised to pull back from their current overbought zones, which is rand negative. In that breath, it is however not unlikely that we see a deeper pullback into the range between 17.30 and 17.38 (s2). Technical indicators on the 4H chart is supporting this pullback; the RSI is trending downwards after falling out of the overbought zone and the buy signal of the MACD is losing momentum and may switch to a sell signal if the expected pull back materializes. Regarding our daily indicators, the RSI is still trending higher and the MACD buy signal is still solid. Looking over at the DXY, the index hit its 50-day MA resistance rate at 103.642 and its technical indicators are also supportive of a pullback for the greenback.
by Goose96
3
Reassessment timeTime to reassess my position on the rand. I expected the 50-day MA rate of 17.15 to hold support for the pair during Wednesday’s turbulent session but Powell’s dovish comments regarding the Fed’s “successful fight against inflation” sent the dollar packing across the board. Equity markets staged an aggressive rally since Powell failed to decisively comment when questioned whether he was concerned about the stock market’s strong start to the year. The SPX and NDX have rallied roughly 2.67% and 5.76%, respectively, since Wednesday’s Fed rate decision. Risk-on sentiment certainly gripped the market in the past two session and the rand hopped on and rode the wave all the down to the 200-day MA level of 16.95. The break below the 38.2% green Fibo rate and the top of the green first impulse wave theoretically invalidates the 5-wave impulse higher towards 17.60 as previously predicted. A break and close below the green 61.8% Fibo retracement rate of 16.99 and the 200-day MA rate of 16.95 will allow the rand to pull the pair back onto the yearly low of 16.70, that is if the current risk-on sentiment is maintained. On the flip side a close above the 50-day MA rate of 17.15 will see the rand weaken back towards the resistance range of 17.39 and 17.50. The DXY pulled back most its gains yesterday following the FOMC demolishing of the greenback, so some rationality is coming back to the market. Given the current local uncertainties and easing of commodity prices, particularly platinum, I don’t see the rand holding the pair below the psychological level of 17.00. Technically the 4h MACD is losing momentum and looks set to cross to a buy signal and the RSI has bounced convincingly off the oversold zone which is rand negative. Don’t forget about today’s NFP’s print, it has the potential to move the markets later this afternoon.
by Goose96
12
Pre-fed 4H USDZARThe upward momentum seems to be fading as we await the open of the US session. The orange 23.6% Fibo retracement at 17.50 is a strong resistance and psychological rate for the pair and I don’t see it giving way before the major Fed event tomorrow. Over the slightly longer term I’m bearish on the rand after the pair broke above the key 50-day MA level at 17.15 and 17.30. A pullback seems to be on the cards as the 4H RSI is topping out just under the overbought zone and the buy signal on the MACD is losing momentum. The pullback will likely see the pair slide into the range between the green 38.2% Fibo retracement rate at 17.18 and the 23.6% Fibo retracement rate at 17.30. The rate at 17.30 will also swing from a previous resistance to a support. (I’m personally planning to leave a few buy limit orders scattered in this range). Given all the market moving data releases and Central bank announcements I suspect we could see the rand weaken towards the range between 17.60 and 17.70. A break above this resistance range will allow the pair to climb higher towards the blue 61.8% Fibo retracement rate of 17.84. (I'll drop the daily timeframe chart in the comments below for context regarding the Fibo retracements levels I'm using) Also see attached my idea for the DXY as we prepare for Fed week!
Long
by Goose96
6
The Rand in the rocky credit markets The economic calendar is wild this week so I thought it would be best to do a deep fundamental dive into the USDZAR . All the attention will be on the Federal reserve tomorrow and whether or when they will pause their rate hikes. We need to look past the hype around the interest rate and the “pivot" narrative. Focus should however be on how the markets will cope with the Fed’s liquidity drain and how it will impact the future price of money ( ie . Interest rates). Before we kick-off, correlation does not imply causation... I’ll start by explaining the chart you’re looking at. What you’re seeing is the positive correlation between the USDZAR and the difference between the South African government bond 10-year yield (ZA10Y) and the US 10-year treasury yield (US10Y). The interest rate differential is referred to as the carry trade potential. Investors can borrow money on the cheap from developed low-risk markets and invest the borrowed money in riskier destinations to earn more interest. The interest rate difference is then pocketed by the investor. The preferred vehicle to capitalise on the interest rate differentials between two locations are government bonds (they are low risk and liquid). The reason for the positive correlation between the USDZAR and the bond yield differential is because when there is risk-on sentiment in the market, investors tend to move funds out of the safety of US treasuries and into riskier assets. The sell-off in US treasuries causes US10Y yields to rise (decreasing the bond yield differential), and the rand tends to appreciate in risk-on phases of the market, citrus paribus. (Decreasing bond yield differential; USDZAR decrease due to rand appreciation). Conversely, when investors are risk-off they run to the safety of US treasuries. The buying of US-treasuries lowers the US10-year yield which increases our bond yield differential. We all know how rapidly the rand can depreciate in risk-off phases when the liquidity wave pulls back to the US, leaving the rand on the rocky shore. (Increasing bond yield differential; USDZAR increases). Our strong correlation however weakened in August 2022 when the US 10-year yield rocketed higher after the Fed started their hiking cycle. Let’s zoom in on the Fed since its Fed week. The most important chart in the market , the Fed’s balance sheet: www.federalreserve.gov . The Fed has so far tapered roughly 5.52% off its balance sheet since April 2022. The Fed is selling treasuries to taper its balance sheet and to soak up liquidity from the market (if there will be enough buyers, only time will tell). This is rand negative. Now let’s get to where all this week’s focus will be, the Fed’s interest rate decision. The Fed is expected to slow its rate hikes to 25bps this week and push rates from 4.50% to 4.75%. The Fed tends to follow the US02-year yield (US02Y) as guidance on its interest rates and it seems as if the US02-year yield has topped out between 4.75% and 5.00%. The Fed pause seems near, and the latest inflation figures from the US supports the narrative that the Fed has managed to cool inflation. The most concerning thing in the market currently is the inverted yield curve: History doesn’t repeat itself, but it rhymes. For the Fed to normalise the credit markets it will have to pause rates. That is usually when something the market breaks and the Fed is forced to cut rates and inject liquidity into the markets. When the Fed pushes easy money ( QE or whatever buzz phrase they'll use) into the market investors rotate from longer dated bonds to shorter dated bonds. To conclude, if and when the Fed pauses its rate hikes, the US10-year yield will melt higher which could be rand positive based off our correlation analysis. Just have popcorn (and gold , silver and other real assets) ready for when the Fed is forced to cut rates/ pivot because that will be caused by arguably the biggest credit market implosion in the history of fiat money. To end off I leave you with the words of Zoltan Pozsar: "commodities are collateral, and collateral is money."
by Goose96
USD/ZAR. Big data expected to bring big movesThe rand managed to pull the pair to a daily close below the 50-day MA, yesterday, off the back of a broadly weaker dollar. There was no data driving the weakness in the greenback but it seems the weakness is stemming from the “plausible soft landing” narrative and the stable decline in US 10-year bond yield since the beginning of the year. Today’s calendar has the potential to kick-start a fresh trend on the USD/ZAR pair. The 50-day MA, currently at 17.14, has acted like a magnet these past 5 trading sessions with no clear break as of yet. The 200-day MA at 16.91 is creeping higher and will serve as a key support rate in today’s potentially wide range session. The 200-day MA also coincides with the neckline of the blue channel. Events for the day: The SARB will announce their first interest rate decision today and it is widely expected that the bank will hike rate by another 50bps up to 7.50%, no real surprises there. The SARB will stick to their hawkish stance as SA inflation (7.500%) still sits stubbornly above the 3-6% target range. The volatility will come from the US GDP print for 2022Q4. QoQ growth is expected to print 2.6% down from 3.2% in 2022Q3. It is becoming increasingly difficult to gauge how the markets will digest macro data releases but a print below expectations will be dollar positive as it will dent the “soft landing” narrative while a higher-than-expected print will add fuel to the risk-on fire in my opinion. Scenarios: 1. Stronger than expected US GDP: USD/ZAR to break below the 200-day MA and possibly test the current yearly low of 16.70. 2. Weaker than expected US GDP: Confirmed break above the 50-day MA to push higher and test the resistance range between 17.39 (blue 38.2% Fibo retracement) and 17.50 (orange 23.6% Fibo retracement rate). I’m personally favouring this scenario, but it obviously depends on how they cook the data haha. Technical indicators: Bullish divergence is still present on the RSI (rand negative). The MACD indicator is still holding a daily buy signal, but its momentum has pattered out this week, but the buy signal is still rand negative. The DXY is also hovering in a strong support range and its weekly RSI is nearing oversold levels which may support the greenback in the weeks to come (see the attached snippet)
by Goose96
2
Dollar gain strength again SA randUSDZAR gained momentum in pushing to the upside since South africa had a negative impact on the economy due to the poper supply issue. We our first price target from last week was that price would hit 17.50 but now that it has made multiple breakout on certain levels we looking forward for the price to head around 17.70. We see a very clear price has reached the RS ZONE on 1H TM and 4H TM. We take longs just after few countable minutes from market open. Most preferable time will be 01h15 am +2 GTM Johannesburg time zone.
Long
by ipot-officialtrader
Oscillations around 200-day MA support (short-term)The rand managed to pull the pair below the 200-day MA, currently at 16.82, last week Thursday following the US CPI print. The pair is however finding support around its 200-day MA and the dollar strength in today's early morning session has seen the pair blast up to the blue 23.6% Fibo retracement rate of 17.12. The macro risk-on factors mentioned below are rand positive, but the technical indicators are not. The divergence on the RSI and the buy signal on the MACD have me leaning towards another test of the 50-day MA rate of 17.19 and a break higher towards the 38.2% Fibo retracement rate of 17.39 and the current yearly high of 17.44. The US CPI print for December added fresh wind into the risk-on sails as the CPI result was in line with expectations at 6.5% and 0.6% lower than November’s print. Last week’s lower than expected initial jobless claims coupled with the strong December non-farm payrolls data is also supportive of the narrative of a strong US labour market. On paper US inflation seems to be easing and its labour market is looking resilient which has the market optimistic for a ‘soft landing’ following the current rate hiking cycle. The current risk-on sentiment in the markets can also be seen in the early year gains for the S&P500 and Nasdaq 100 which has gained roughly 5.50% and 7.02%, respectfully, since the start of the year.
Long
by Goose96
2
USDZARTrade are still running patience pays, Big changes for state companies and nationalising the Reserve Bank – here are key proposals from the ANC The ANC suggested that measures be taken to contain state debt and said that the introduction of a wealth tax be considered to reduce inequality. The draft policy documents also reiterate that the government should establish a state bank, even though Finance Minister Enoch Godongwana has warned that the country can’t afford to fund it. Central Bank The documents state that the “historic anomaly of the private ownership of the South African Reserve Bank must be corrected, in a manner that does not enrich speculators or overburden the fiscus.” The SARB is one of a handful of global central banks owned by investors — including individuals, commercial banks and pension funds — though its shareholders have no say over monetary policy or the appointment of its governors and Monetary Policy Committee. While the ANC first decided in 2017 that the state should own the central bank, the process — which will require a change to the Reserve Bank Act and an agreement on the price of shares — has stalled. The ANC called on the SARB to “implement monetary policy in a balanced manner, taking into account growth, employment, and exchange rate factors.” The Reserve Bank implements its inflation-targeting mandate in the interest of balanced and sustainable growth, in line with the constitution, and has repeatedly said the obstacles to bolstering output fall outside the scope of monetary policy.
Long
by Mike_SnD
2