EUR/ZAR recaptures 6 April highs

EUR/ZAR exchange rate edges higher today after a straight 9-day rally. The South African Rand (ZAR) has struggled to gain against the EUR after South Africa reimposed its lockdown adding an additional night time curfew earlier on in July. South Africa has one of the strictest lockdowns in the world, restricting more or less all outdoor movement and prohibiting the sale of cigarettes and alcohol, which needless to say devastated an already wobbling economy.

As the EUR/ZAR currency cross manages to recapture the 6th April highs, small speculators have become very optimistic about future prices for this pair, with 78% of them holding long positions (short term). Euro speculators, in general, boosted their bullish exposure this week to a new record high, according to the latest Commitment of Traders data (COT). Bullish positions increased by over +23,000 contracts, totalling +108,086. What happens at (2) will most likely set the tone for the short-medium term. A convincing break, hold and close above this key resistance level (2) on a 2-3 day time frame would most likely encourage buying pressure. Alternatively a replay of 6th April this year is possible if resistance proves too strong (1a).