The USDZAR pair is up by more than 0.50%, continuing a bull run that started on June 28. Since then, the South African rand has weakened from 16.3467 to today’s high of 17.7891, which is the highest it has been since May 21st.
The South African rand is not the only emerging market currencies in the red at a time when the US dollar has been in the red. In the past five days, the Turkish lira has climbed by more than 5% while the Brazilian real has weakened by more than 6%. The weakness of these emerging market currencies come as investors realize that these countries will have a difficult time recovering than their developed world peers.
The South African rand has also been under pressure because of the weak economic numbers from the country. Recent numbers show that the country’s auto sales will slump to the lowest level in 17 years. At the same time, the country’s manufacturing sector has continued to struggle as more people prefer importing from Asian countries.
Further, according to Bloomberg, the crucial platinum mining industry is in its deathbed. All these factors have put pressure on the South African economy and pushed the USDZAR pair higher.
USDZAR technical outlook
The USDZAR pair is trading at 17.7891, which is above the important resistance level of 17.5327. This resistance was the highest level on June 26. The price is also above the 100-day and 50-day EMAs. Also, it is slightly above the 38.2% Fibonacci retracement level of 17.300. Therefore, it seems like bulls are in total control, which means that the price is likely to continue rising as bulls aim for the 18.000 resistance level.
On the flip side, a move below 17.000 will invalidate this thesis. This is an important psychological level that is also along the 100-day EMA.