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ZAR: USD/ZAR Nears Monthly Low Amid Greenback Weakness, Gold Rally

ZAR
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With press articles and ex-Fed commentary boosting the chances of a 50bp FOMC cut next week, the USD index has fallen 0.35% at typing, with sustained weakness in the greenback continuing to drive USD/ZAR lower through Friday trade. Strength in gold, which is 0.8% higher today and at a fresh record high, will also be contributing to ZAR outperformance in the EMEA space.

  • Expectations of looser Fed policy is likely working in the rand’s favour, with the SARB’s rate decision slated for Thursday. A cut in the US would make it easier for South African policymakers to follow suit, while domestic inflation dropping close to the +4.5% Y/Y target mid-point and moderating inflation expectations could also be cited to support looser domestic policy.
  • Initial firm resistance for USD/ZAR is seen at 18.04, the 50-day EMA, which remained intact following gains earlier in the week. Technical conditions for the pair are bearish overall given the broader price sequence of lower-lows and lower-highs, paving the way for an extension towards 17.5713, the Jul 28 ‘23 low.
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With press articles and ex-Fed commentary boosting the chances of a 50bp FOMC cut next week, the USD index has fallen 0.35% at typing, with sustained weakness in the greenback continuing to drive USD/ZAR lower through Friday trade. Strength in gold, which is 0.8% higher today and at a fresh record high, will also be contributing to ZAR outperformance in the EMEA space.

  • Expectations of looser Fed policy is likely working in the rand’s favour, with the SARB’s rate decision slated for Thursday. A cut in the US would make it easier for South African policymakers to follow suit, while domestic inflation dropping close to the +4.5% Y/Y target mid-point and moderating inflation expectations could also be cited to support looser domestic policy.
  • Initial firm resistance for USD/ZAR is seen at 18.04, the 50-day EMA, which remained intact following gains earlier in the week. Technical conditions for the pair are bearish overall given the broader price sequence of lower-lows and lower-highs, paving the way for an extension towards 17.5713, the Jul 28 ‘23 low.