The USD/ZAR continues to trade in a choppy manner on Friday, with the greenback just retaining a 0.06% advance on the South African Rand. After holding sway for most of the day, the Rand lost its hold in the pairing after poor South African trade balance data and the rise in the Federal Reserve’s core inflation barometer.
The Core PCE Price Index registered a monthly gain in data released by the Bureau of Labor Statistics. The move from 0.0% to 0.6% (consensus 0.5%) in this metric reinforces recent hawkish Fedspeak and market expectations that the Fed will continue its aggressive rate hike trajectory in its last two meetings for 2022.
The data set was preceded by South African trade balance data for August 2022. This data piece showed a decline from 24.81 billion to 7.18 billion. The consensus had been for a drop to 23.70 billion. The US and South Africa trade balance data caused a reversal of the Rand’s earlier gains of the day and keeps the USD/ZAR clear of the 18.00 price mark.
The USD/ZAR’s bounce off the ascending trendline that connects the lows of 15 August and 23 September 2022 is the springboard on which the bulls can aim for a break of the 11 May 2020 low/28 September 2022 high at 18.20791.
If the bulls achieve this break, the 18.54373 resistance (12 May 2020 high) becomes the new target to the north. The 24 April low/6 May 2020 high constitutes another upside target at 18.82770, while 19.16877 (23 April 2020 high) becomes an additional harvest point for the bulls if 18.82770 is uncapped.
On the flip side, the breakdown of the ascending trendline allows the bears to connect with the 17.74297 support. Below this level, a further push to the south targets 17.51252 (25 June 2020 and 9 September 2022 highs). There are additional targets to the south at the 17.21925 (8 September 2022 low) and at 16.98867 (18 July and 13 September 2022 lows). Additional harvests to the south are found at 16.86383 and the 8/27 July 2022 lows at 16.66526.