Though much of the attention in the FX market automatically goes to the majors, there are some remarkable technical pictures among the Dollar-based EM pairs. In particular, I am impressed by the pattern shaped by USDZAR through the past year.
The post-pandemic recovery trendline resistance is still guiding the exchange rate lower, but we are starting to come upon far more significant support levels founded on years of price action. A break in either direction would likely require a significant escalation in conviction beyond the casual drift we have seen these past months.
If risk appetite continues to rise, the 3.50% benchmark yield on the Rand could draw more appeal, but the forecast for this rate's path is not particularly encouraging. So, while a haven bid would certainly benefit the Greenback, even comparative yield forecasting could benefit a USDZAR bullish view. Overall, the easier technical move would be to clear resistance in the trendline and 100-day moving average.
The post-pandemic recovery trendline resistance is still guiding the exchange rate lower, but we are starting to come upon far more significant support levels founded on years of price action. A break in either direction would likely require a significant escalation in conviction beyond the casual drift we have seen these past months.
If risk appetite continues to rise, the 3.50% benchmark yield on the Rand could draw more appeal, but the forecast for this rate's path is not particularly encouraging. So, while a haven bid would certainly benefit the Greenback, even comparative yield forecasting could benefit a USDZAR bullish view. Overall, the easier technical move would be to clear resistance in the trendline and 100-day moving average.