ZAR: USD/ZAR Following Moves in USD Index, But Trend Set-Up Remains Bearish

Price action for USDZAR has largely reflected that of the broader USD index during Wednesday trade, with weakness across the commodities space and a surge in US yields underpinning ZAR weakness. But despite today’s strong bounce, the trend set-up in USDZAR still appears bearish from a technical point of view, and the latest recovery is - for now - considered corrective.

• While the pair has briefly pierced resistance at the 50-day EMA, at 17.6608, a clear break of the average is needed to undermine the overall bearish theme and highlight scope for a stronger reversal. This would open 18.0138, the Sep 12 high. Initial support, meanwhile, is at 17.3658, the Nov 5 low.
• Citi strategists recommended buying the South African rand versus the Mexican peso in a note published earlier today, saying they have a more constructive view on ZAR as the government moves ahead with much-needed reforms.