Rand Dollar Outlook: USD/ZAR gains, JSE SA 40 Index Tests Key Level

Rand Dollar Technical Analysis

• USD/ZAR regains bullish momentum after rebounding off of psychological support
• US Dollar strength remains a threat to the volatile Rand
• South African shares trade higher as the mining sector strengthens

Dollar Rand Bounces Off Support After Retreating From 17.00 Earlier This Month

USD/ZAR is trading slightly higher on the day after retreating from the 17.00 handle last week.

For the Emerging market currency (EM), the recent Fed rate decision and softer US economic data allowed the Rand to strengthen before rebounding off of the 16.40 handle, currently holding as support.

While the volatile Rand remains vulnerable to USD strength, a few technical levels have contributed to the recent move, providing both support and resistance for price action.

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USD/ZAR Daily Chart

Chart prepared by Tammy Da Costa using TradingView

For bullish continuation to prevail, USD/ZAR would need to rise above 16.753 (23.6% Fibonacci of the Aug 2020 – June 2021 move) raising the prospects for a retest of 17.00. A break of both these levels would then open the door for this month’s high at 17.305.

SA 40 Index (JSE Top 40) Technical Analysis

Much like the wider equity market, the JSE SA 40 (South Africa Top 40 Index) has ended the week in the green after falling below 5800 earlier this month.

With prices clinging to the 6200 mark, the CCI (Commodity Channel Index) continues to threaten overbought territory suggesting that the momentum of the uptrend may subside.

However, with price action sitting comfortably above the 50-day Moving Average (MA), bears would need to drive prices back below 6000 in an effort to retest that 5800 zone.

JSE South African Top 40 Index (SA 40) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

At the time of writing, mining giants Anglo American Plc and Impala Platinum Holdings Plc are market leaders gaining 3.78% and 3.63% respectively while Aspen Pharmacare Ltd leads losses, currently trading around 4.52% lower for the day.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707