USD/ZAR Forecast: USD Sitting at 200-Day EMA Against Rand

At this point, it simply going to come down to how the market reads comments and the tone coming out of Jerome Powell’s mouth.

The US dollar initially tried to rally on Tuesday but gave back early gains against the South African rand as we continue to consolidate around the 200-day EMA. As a result, it looks as if the market is trying to determine whether or not it is going to pay attention to the trend line sitting just below and the aforementioned 200 day EMA.

This is an interesting area for this market, mainly due to the fact that the South African rand is a large emerging market currency, and recently the South African economy was “Ground Zero” for the omicron effect. Because of this, a certain amount of distaste for anything South African-related permeated during Q4 of last year, and as a result, the US dollar got as high as 16.35 against the rand. We have since dropped well over 1 full rand, and now are pressuring serious support levels. With that in mind, it will be interesting to see whether or not this trend line holds, and Wednesday could very well be the key.

Do not forget that the FMOC meets on both Tuesday and Wednesday and has the all-important statement and press conference late during the day on Wednesday. This will have a direct effect on what happens with the US dollar and then, by extension, this currency pair. Keep in mind that the emerging markets out there have a lot of trouble with higher interest rates, so if we do continue to see the Federal Reserve sound as hawkish as they have recently, it is very likely that we may see a bit of trouble in this pair and watch the US dollar attempt to get back to the 50 day EMA at the 15.51 rand level. If we break above there, then we will almost certainly go looking towards the 16 rand level.

On the other hand, if we break down below the uptrend line and clear the 15 rand level, it is very likely that we will continue to see the US dollar give up its earlier gains. At this point, it simply going to come down to how the market reads comments and the tone coming out of Jerome Powell’s mouth.

USD/ZAR

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.