ZAR against USD, EUR, and GBP Over the last few weeks, the rand
(ZAR) has strengthened considerably against some top currencies, namely
the dollar (USD), euro (EUR), and pound (GBP). These movements present
possible selling opportunities for the rand against these baskets of
currencies.To get more news about WikiFX, you can visit wikifx official website.
Arguably, the most notable one to watch would be USD/ZAR for an
excellent reason: employment figures. The recent selloff for this pair
correlates to similar selloffs with EUR/ZAR and GBP/ZAR. Generally
speaking, since the dollar is the most powerful currency, we can expect
that any reactions on USD/ZAR will affect the other two. We could
argue that one of the main reasons for the dip in USD/ZAR over the last
few weeks is the NFP results on the 4th of September, 2020. The forecast
was that the US economy would add 1400 jobs (excluding farm,
non-profit, private household, and government employees). However, the
figure came out at 1371, which negatively affects the dollar, at least
in the short term. A few days after, USD/ZAR and the other two ZAR pairs
started trending down as exemplified in the above image.
About a month ago, I had briefly spoken about the R16.34 level as a
potential supply zone for USD/ZAR. We would typically wait to see how
the market reacts around such areas. As we can see, the market clearly
broke that level and closed lower on two consecutive days. I dont
believe this level will hold the market for very long. On the 16th
of September, 2020, the market closed below the R16.34 level to R16.20.
If the level were strong enough, the market wouldnt have closed below
R16.20, yet it did. We should naturally expect a slight pullback to the
upside in the meantime. Now I believe there is a real chance that
USD/ZAR would trend lower at least some distance below R16.00. The
charts of EUR/ZAR and GBP/ZAR are all painting a similar picture, but
any pullback could turn into a continuation of the bigger uptrend for
other reasons Those reasons could be around critical fundamental
data coming up that may significantly affect the price of ZAR. While
there are other fundamental data for the other currencies not long
afterward, ZAR‘s data will be a bit more relevant as it’d be released
sooner. On the 29th of September, 2020, the unemployment figures for Q2
will make their way into the public domain. Q1s result, released on the
23rd of June 2020, came in at a record high of 30.10%. Surprisingly, the
forecast is slightly lower, at 29.70%. Jobs-wise, things in South
Africa are unlikely to drastically improve this year even with the less
restricted lockdown rules that have seen more people working again.
It‘s going to be interesting if that figure is any lower than 30.10%. If
it’s higher, then we‘d expect ZAR to weaken, and vice versa if it’s
lower. Strictly for this week, it would be wiser, in my opinion,
to look for any short opportunities across all three pairs.
Simultaneously, we would need to keep an eye on the unemployment figure
for ZAR and some other fundamental data coming afterward for USD, EUR,
and GBP.
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