From a general technical standpoint, over the long run, USD/ZAR has
primarily been in a substantial uptrend for several years now. We can
see multiple extended uptrends across bigger time-frames from the daily
to the monthly chart. Historically, since South Africa is, for the most
part, a developing country, any dominant currency paired against it like
the dollar usually tends to have the upper hand. Many exotic currencies
exhibit these traits. While there have been dips to the other side,
South Africa's economic problems have made its currency gradually
weaker. On the 6th of April 2020, the USD/ZAR hit an all-time high price
of R19.35, mainly due to the global Covid-19 pandemic and Moody's
downgrade ratings around that time.To get more news about https://www.wikifx.com, you can visit wikifx official website.
Since then, South Africa's currency has gotten marginally better by a
few rands, though the market hasn't forgotten this price level and may
look at passing significant milestones to get to it again potentially.
The first of those milestones would be the R17.79 price level. There was
a pullback that lasted for a few months after the record high. After
that, we started trending higher from the 22nd of July at R16.34 up to
R17.79. So, we could treat R17.79 as a potential supply zone while
R16.35 as a possible demand zone.
From the fundamental perspective, we can look at the employment figures
and the interest rates of each respective currency. The US seems to be
winning here compared to South Africa. The US economy added 1763 jobs in
July according to their Non-Farm Payrolls release on the 7th of August
2020. On the other hand, South Africa's figures are quite gloomy. For
their Q1 report in June, the unemployment percentage reached an
unprecedented all-time high of 30.10%, a 1% jump from the previous
figure of 29.1%. A slightly better jobs figure for America should give
investors and traders more impetus to have a bullish outlook on the
greenback against ZAR.
For interest rates, the Fed has firmly
remained at 0.25% for a few of their last interest rate decisions. On
the 15th of March 2020, the Fed decreased it from 1.75% to 0.25%, which
is the first time since the 2008 financial crisis it has been this low.
On the other hand, the SARB (South African Reserve Bank) has also done
something similar as they've decreased their interest rates since the
pandemic gained more worldwide attention. These efforts are partly
measures to boost both respective economies during the global pandemic
crisis. We can expect both interest rates to remain more or less where
they are in the near future since it will take quite a long time for
most of the world to recover. So we can't take advantage of any
disparities with these rates for now.
So, overall, no real short-term trading opportunities exist for
USD/ZAR. We can only look at the R17.79 level and see what the market
does should it get there. However, the easiest bias one can have with
this pair is bullish for the long term.
