BRICS currencies movement for the week – 26 June 2020

Stable week for the Rand (ZAR). Movement was somewhat better than most BRIC currencies and in line with USD weakness.

BRICS currency/USD movements for this week:

Brazil -3.2%
Russia -0.5%
India +0.8%
China -0.1%
South Africa +0.6%

Euro /USD +0.4%

Technically, the ZAR remained within the parallel channel, with the top resistance level being tested every day over the past week. We also 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 R17.30/USD level on Monday, with all major US markets having a selloff on Friday. This could see a continuing of a “risk-off” environment, which could be bad for all Emerging Markets (including South Africa). A break and close above the parallel channel could see the ZAR seeking resistance at R17.65, with a break and close above these levels, very much seeing the ZAR back at R18.30 - R18.35.

Should we however stay below R17.30 and break below the 8-day EMA at R17.23, 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 (R16.35), with a break and close below, very much putting us back at my medium-term target, R15.50.

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 R17.50. Most likely trading band this week is being between R17 and R17.65.