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Extension Lower in USDZAR Highlights Bullish Rand Sentiment

ZAR
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  • A softer greenback and lower core yields have supported the rand, which is only being outperformed by the Israeli shekel out of the major EMEA currencies. Analysts have pointed to BHP’s takeover approach for Anglo American as playing a role in boosting sentiment toward South African assets in recent days, while the break below the 19.00 handle and 50-, 100- and 200-DMAs in USDZAR on Friday have buoyed bullish rand sentiment.
  • As we noted earlier, the rand has been sensitive to signals related to the potential outcome of South Africa's national and provincial elections slated for May 29. This has been reflected in a surge in USDZAR 1-month implied volatility to its highest point since August 2023 this morning, as the contract now captures the election day.
  • From a technical perspective, the break below the 50-day EMA in USDZAR suggests that a bearish outlook dominates for now and this highlights potential for weakness towards 18.4131, the Apr 9 low and a key support. Clearance of this level would strengthen a bearish condition.
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  • A softer greenback and lower core yields have supported the rand, which is only being outperformed by the Israeli shekel out of the major EMEA currencies. Analysts have pointed to BHP’s takeover approach for Anglo American as playing a role in boosting sentiment toward South African assets in recent days, while the break below the 19.00 handle and 50-, 100- and 200-DMAs in USDZAR on Friday have buoyed bullish rand sentiment.
  • As we noted earlier, the rand has been sensitive to signals related to the potential outcome of South Africa's national and provincial elections slated for May 29. This has been reflected in a surge in USDZAR 1-month implied volatility to its highest point since August 2023 this morning, as the contract now captures the election day.
  • From a technical perspective, the break below the 50-day EMA in USDZAR suggests that a bearish outlook dominates for now and this highlights potential for weakness towards 18.4131, the Apr 9 low and a key support. Clearance of this level would strengthen a bearish condition.