As we already know, the US dollar got hit strongly after yesterday’s FOMC decision, which had its negative effect on USD/ZAR as well. The pair fell sharply and, on its way lower, broke the short-term upside support line drawn from the low of January 31st. In addition to all that, USD/ZAR exited its short-term range that it was trading in since around March 7th. This led the rate all the way down to test the 200 EMA, together with the 14.15 support zone, marked by the low of March 4th. For now, we remain bearish over the short-term outlook, but will wait for a confirmation break below the 14.15 level first, before getting comfortable with further declines.
As mentioned above, a drop below the 14.15 support area could confirm a forthcoming lower low and could invite more sellers into the game. This way we could target the next potential obstacle on the pair’s way down, the 14.05 zone, marked near the highs of February 21st and 22nd. If that area fails to halt the rate from moving lower, a break of it could drag USD/ZAR to 13.95 level, which is marked near the high of February 27th.
Looking at our oscillators, both somewhat support the above-discussed scenario. The RSI is below 50 and still points slightly to the downside, even though it rebounded from around the 26 zone. The MACD is below zero and its trigger line, and also points lower.
Alternatively, if we see USD/ZAR reversing higher and pushing back above the 14.27 hurdle, which is the lower side of the aforementioned range, this might raise concerns over the pair’s short-term downside scenario. This might get picked up quickly by more buyers and the rate could accelerate towards the 14.38 obstacle, marked by the low of March 15th. If that obstacle is just seen as a temporary pit-stop for the bulls, then a break of it could lift USD/ZAR to the upper bound of the previously-mentioned range, at 14.54.
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