It seems that the emerging markets are not the place to be invested in right now. The South African Rand has also been hit in the past few days, where we saw USD/ZAR shifting strongly to the upside. The pair found good support on Wednesday at around the 13.25 level, from which it shot up quickly. Now the question here is, will the 14.00 barrier be able to withhold the rise?
For now, we will stick to the upside, given the fact that USD/ZAR continues to trade above the upside moving trendline, taken from the low of the 26th of March. The pair is getting closer to its potential strong area of resistance at 14.00, which has been the highest point seen in June. If a break of that area happens and we see USD/ZAR closing above it, this could invite more bulls to the table and we could see the pair moving higher towards its next potential area of resistance at 14.15, marked near the high of the 24th of November. Further acceleration in the rate could open the path to the highest point seen in 2017 and that’s around the 14.57 hurdle. Certainly, let’s not exclude the possibility of a move lower, in order to test the aforementioned trendline, from which the pair could bounce and move back up again.
For us to turn bearish on USD/ZAR, at least for the near term, we would need to see a break and a close below the abovementioned upwards moving trendline. The move could open the way towards some lower key support levels. The first one to watch could be the 13.07 zone, marked by the low of the 31st of July. If that zone does not hold, then we could see a drop to the 12.89 area, which acted as strong resistance on the 21st of May.
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