The Rand Report

Short term weakness for the rand expected

In our last USD/ZAR report, we focused on the short term price consolidation between levels R12.85/$ and R13.10/$. The price was testing the resistance of this short term range at R13.10/$ and we were waiting for price close above this level to trigger an upside breakout. R13.40/$ was the initial upside target, while a close below the intraday low at R12.97 was suggested as the failure level. 

The rand did in fact weaken significantly against the dollar to reach our upside target of R13.40/$ before strengthening marginally and trading through the level once again (following the failed vote of no confidence in the South African president, Jacob Zuma).

Currently the USD/ZAR currency pair looks to be finding support near the R13.10/$ level once again. The blue arrows highlight candles with long lower wicks, which suggest that this is where appetite for the dollar has been re-emerging,  as the currency pair has been bought up from this level a couple of times recently. From current levels to R13.10/$, we consider an area of accumulation for the USD/ZAR and favour renewed short term weakness for the rand (strength for the dollar) to take the currency pair back to 13.40 and possibly 13.53/$. Should the currency pair instead move to close below trend line support at R13.00/USD the aforementioned view would be deemed to have failed. 

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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