From around the beginning of June, the US dollar was weakening against its South African counterpart, the rand, this way forcing USD/ZAR pair to move strongly in the downside direction. We can see that the rate is now trading below its short-term tentative downside resistance line taken from the high of June 7th. Also, USD/ZAR currently remains below all of its EMAs on the 4-hour chart, which could be interpreted in the negative way. But at the same time, the pair is stuck within a small triangle formation that has been in play from the end of last week. For now, we wait for a clear break through one of our key support or resistance areas, which might confirm a further directional move.
If USD/ZAR continues to respect the aforementioned short-term tentative downside resistance line, it may attract the bears back into the field, forcing the rate to depreciate again. But in order to get comfortable with lower levels, we would need to see a break of 14.1940 hurdle, marked by the lowest point of June. This way, the pair would confirm a forthcoming lower low and we could see a move towards the 14.1315 obstacle, or even the 14.0877 hurdle, marked by the low of April 22nd. Even if the rate rebounds from that hurdle, as long as it continues to trade below the current lowest point of June, we will remain somewhat bearish still. If the pair drifts south again and breaks the 14.0877 zone, this might clear the path to the other potential support area, at 14.0172, marked by the low of April 19th.
Alternatively, if the rate accelerates, breaks above both, the upper side of the triangle and the aforementioned downside resistance line, we will abandon the bearish-case scenario, at least for a while. But if USD/ZAR climbs above the 14.4405 barrier, marked by the high of June 21st, we will start aiming for higher levels. This is when the 14.4860 obstacle could come into play, a break of which might lift the rate to the 14.5795 zone, marked by the high of June 19th. If that area doesn’t stop USD/ZAR from pushing further north, its break could open the door for a possible test of the 14.6297 level, which marks the low of June 12th.
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