ONLINE FOREX BROKER
2020-11-20 • Updated
The South African Reserve Bank (SARB) left its interest rate unchanged. That decision underpinned the rand and allowed it to close green yesterday. The enormous government support measures in combination with optimistic vaccine news encouraged investors to stream their capital to emerging markets currencies such as the rand. Nevertheless, the current cautious market sentiment has limited the ZAR’s potential to rise. The fresh virus outbreak and related lockdowns, curfews, and social distancing restrictions toned the risk-on impetus down.
Indeed, there are downbeat risks for the African rand in the short term, but many analysts forecast the steady rebound of economic activity in 2021(which is so close already). Therefore, stocks and riskier currencies such as the rand will get a boost.
If we look at the USD/ZAR chart, we’ll notice that the rand has managed to regain most of its losses already. As Danske Bank properly mentioned, “we view most, if not all, of the fall in USD/ZAR as due to global tailwinds, not domestic”. In other words, the only risk-on sentiment would be enough to underpin the rand and drive USD/ZAR even lower. Danske Bank’s forecast is 15.0000 for the coming months. "We could see more emerging market strength in coming months as the reopening continues”. In addition, many credible banks such as JPMorgan and Goldman Sachs predict a soon fall of the USD, which would be beneficial for the ZAR.
After the gradual falling, USD/ZAR formed the symmetrical triangle, so the pair may go anywhere now. If it breaks the upper trend line at yesterday’s high of 15.5700, the way to the next resistance of 15.6500 will be clear. In the opposite scenario, the move above the lower trend line of 15.3180 will drive the pair lower to November’s low of 15.2000.
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Last Friday’s NFP was disappointing. The reaction of the markets was astonishing. Will it last longer? Let's find out the main trade opportunities for the upcoming week.
Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.
The views here are solely based on Technical Analysis techniques using my personal Smart Money approach. Hence, it is important to understand that the trading of CFDs comes at a risk; if not properly managed, you may lose all of your trading capital. To avoid costly mistakes while you look to trade these opportunities, be sure to do your own due diligence and manage your risk appropriately.
Even though we've only witnessed sluggish movements from the Dollar over the past few weeks, the general idea and bias still seem intact and untampered. The bullish impulse however can be seen as "searching for support".
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