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USD/ZAR: bears are strong
Information is not investment advice
What happened?
The Fed is pushing investors to emerging markets. The lower rates for longer implies the falling yields for the US dollar. Elsewhere, the Covid-19 pandemic is getting out of control in the world’s largest economy, which drives traders away from the US dollar. Moreover, the optimistic outlook for soon widespread vaccinations and economic growth in 2021 increased the demand for riskier assets. As a result, the African rand gained.
Forecast
CIBC Capital Markets forecasts the continuation of the downtrend for the US dollar and the uptrend for the emerging market currencies. CIBC anticipates USD/ZAR will end 2020 at around 15.15, and 2021 at 14.95.
Technical tips
Let’s look at the daily USD/ZAR chart. The pair is trading in the downtrend as we can observe lower lows and moving averages in descending order. If the pair manages to break through the key support of 15.0000, the way down to the six-month low of 14.7350 will be clear. In the opposite scenario, the move above the high of November 18 at 15.4500 will push the pair further up to the high of November 12 at 15.6500.
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