USD/ZAR short-term strength?
|The South African Reserve Bank (SARB) moved up its Monetary Policy Statement (MPC) from May 2020 to the 14th April 2020 in light of the growing number of infections in the country. The MPC decided to cut the repo rate by 100 basis points. This took the repo rate to 4.25% per annum a level not seen in the last two decades.
The rand started to weaken after the announcement playing out to our previous idea that we will see a correction higher to the yellow zone before we see more strength on the rand.
The underlying strength from the rand will be a result of continued dollar weakness in the broader financial market. The bearish scenario will play out as long as we do not break 19.0000 and the 78.6 Fibonacci level. The sideways and corrective nature of wave B shows upside targets may be limited. The current price action has us below the 78.6 Fibonacci level.
Once we start moving lower we can expect a minimum target of 17.23000 and 17.0000 before a possible move higher above the current all-time high of 19.35000. We have a small gap that was not filled at 17.65760.
Res: 19.00000; 19.25000; 19.35000
Sup: 17.33040; 17.47333; 17.00000
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