The South African Rand has displayed ability to maintain its strong trend against the US Dollar.
The past couple of weeks of trading for the USD/ZAR has positioned the South African Rand near its stronger late March support levels. The renewed strength of the ZAR since mid-May is beginning to take on characteristics of a solid trend, but the currency is testing important waters which have not been seen since worries about Coronavirus in South Africa were only beginning to cause alarm.
Until now critical support levels of 17.200 have not been penetrated short term, but if the support levels fail to hold and strength continues to be displayed by the South African Rand there is a gap which may find itself tested below for the first time in 3 months.
The value of Gold remains strong. The commodity’s rise in value as investors seek a hedge against mid and long term inflation worries, and as safe haven asset have helped the ZAR too. Yes, the Rand certainly took a hit and weakened against the USD as fears of the Coronavirus outbreak began to take hold in South Africa. However, after hitting important resistance levels near 19.000 in early and late April, the ZAR has proven resilient and had has been able to sustain a stronger trend downward.
May proved to be a solid month for the ZAR, will June continue the trend?
It is clear the USD/ZAR has been testing important support the past week. South Africa still faces many questions regarding its handling of the Coronavirus and the long term effects it will have on the nation. However, the population of South Africa is young and is seen as full of potential by many international trading partners. While its governance remains troubling and questions about corruption regrettably cause concern, the South African Rand remains robust and an important currency because of its commodity production.
Many stock markets have bounced back since the initial phases of the Coronavirus meltdown which brought on steep fears about economic hardships. The economic difficulties have certainly not been fully calculated yet internationally, nor have all nations gone fully through the mire of the pandemic yet. However, South Africa may be in a position which its youthful vitality helps get it through the crisis. The nation has also received praise from activists who believe South Africa has been proactive regarding its handling of the Coronavirus, which stands in sharp contrast to the way it handled the AIDS epidemic in the past.
The South African Rand has performed well the past month and its trend continues to look positive. The ZAR appears to be in a position to test support levels and if the currency penetrates below with strength it may continue to muster confidence.
South African Rand Outlook for June
Speculative price range for USD/ZAR is 16.200 to 18.220 USD during June
Support at 17.200 remains a targeted juncture and may be a springboard for stronger realms for the ZAR if penetrated, perhaps to support levels near 16.500
Resistance at 17.775 to 18.200 USD looks strong for the coming weeks