BRICS currencies movement for the week – 3 July 2020

Despite having a bit of a rocky start to the week, the Rand (ZAR) again enjoyed a pretty positive week. The movement was in line with most BRIC currencies and in line with USD weakness.

BRICS currency/USD movements for this week:

Brazil +3.2%
Russia -2.2%
India +1.3%
China +0.2%
South Africa +1.2%

Euro /USD +0.3%

Technically, the ZAR remained within the parallel channel, with the top resistance level being seriously tested at the beginning of the week. We again saw the 21-day Moving Average (EMA) acting as a very strong resistance level.

The 14-day RSI also remained stable this week.

I will still be monitoring the R17.08/USD level in the early part of this coming week. A break and close above the parallel channel could see the ZAR seeking resistance at the 50-day EMA at R17.37, with a break and close above these levels, very much seeing the ZAR back at R17.65. Should we break above the R17.65, the next target becomes R18.35.

Should we however stay below R17.08 and below the 8-day EMA at R17.12, we could see the ZAR moving closer to the strong support level (bottom of the parallel channel) at R16.50 again. A break a close below this level could see the ZAR back testing the 200-day EMA (R16.39), with a break and close below, very much putting us back at my medium-term target, R15.50.

Al three the 8-, 21- and 50-day EMA are now pointing downward, which is a good indication that the trend is becoming a lot healthier.

I will however still caution any short positions prior to a confirmation-break below R16.50 and remain Neutral for now. For those traders considering a long USDZAR (short ZAR) position, should wait for a proper break and close above R17.37. The most likely trading band this week is being between R16.50 and R17.37.