FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

Short sellers ready to loot the South African rand?

14 July 2021

Where to next for South Africa? Take a read below to find out more. The rand had been heading in the right direction, strengthening against the dollar all the way down from its 19 level blow off top back in April 2020. There were a couple of factors helping the rand recover its losses. 1) In a world of compressed yields, investors went searching for higher interest rates and SA offers some of the most attractive carry in the world 2) SA is a big commodities exporter and with prices surging on this front, their terms of trade improved significantly 3) Positive developments around shoring up the ailing State Owned Electricity Company, Eskom’s balance sheet as debt was reduced by about a fifth. 4) A relatively resilient and less restricted economy.

So what is the explanation behind the weakness we’re seeing now? Two things. 1) The extreme looting and disorder we’ve seen across South Africa in response to the arrest of former President Jacob Zuma is seeing a risk premium slapped back onto SA by currency traders 2) The US Central Bank (Fed) is beginning to go down the path of policy normalization. Yesterday saw a very punchy inflation print which only adds fuel to the fire in terms of expectations around tightening by the Fed.

The other problem is a very slow vaccination rollout as SA enters their 3rd wave. Vaccine centers have also had to temporarily close as a result of the widespread violence. It’s upsetting to see my place of birth getting torn apart - my hope is that this is a temporary phenomenon to be faded and order is soon restored. Although, transaction costs tend to be higher for the USDZAR, when you have an Average True Range reading of circa 2000 pips there’s plenty opportunity for traders to take advantage of the volatility. Options traders see an 81% probability that the rand will slide to 15 per dollar this quarter.


Looking at the technicals, price is sniffing around the 200-day SMA, which will be a key level for USDZAR in the coming days. A breach of this could see a fast sell-off as stops are triggered and bring 15.50 into play. Price broke out of the mini range between 14.42 and 14.12 that it had been in for almost a month. The downtrend line from the highs of March/April 2020 has also been breached. The RSI is close to overbought, but can clearly become even more overbought should conditions deteriorate.

The 21-day EMA continues to provide dynamic support to price on the upside. For a pullback I’d monitor the 14.42 former range resistance as a price target. The momentum, however, currently remains towards further weakening in the rand.




The Downfall of Euro in 2022: the Analysis of its Reasons, the Current Situation, and the Objective Forecast
The Downfall of Euro in 2022: the Analysis of its Reasons, the Current Situation, and the Objective Forecast

Before getting down to analyzing why Euro reminds of a mafia victim in cement shoes falling off a Chicago bridge, allow us to open it up with a meme joke that best describes this whole ordeal...

31 Oct 2022

XAU/USD juggles around $1,710 as investors await US NFP
XAU/USD juggles around $1,710 as investors await US NFP

Gold price (XAU/USD) is displaying topsy-turvy moves in a narrow range of $1,709.35-1,713.42 in the early European session. The precious metal is displaying a lackluster performance...

7 Oct 2022

Positive mood stalls on the “pivot” trade
Positive mood stalls on the “pivot” trade

USD slid against most of its major peers. The DXY closed a tick above its lows of 110.05. Resistance is at 110.76 while next support is 109.29. GBP gained for a sixth session in a row, a winning streak not seen since April 2021...

5 Oct 2022

OctaFX glances at current economic shifts - the good, the bad, and the strange
OctaFX glances at current economic shifts - the good, the bad, and the strange

Pandemics and health crises, political tensions, geopolitical tension flashpoints popping up, Western sanctions on significant European and Asian economies, and grave tensions between...

3 Oct 2022

The Euro rebounded from the low
The Euro rebounded from the low

After updating its multi-year lows again, the major currency pair rebounded. The current quote for the instrument is 0.9656. Last night, the local interest in risks improved a bit, helping the asset to successfully correct...

29 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back...

28 Sep 2022

Editors' Picks

HFM information and reviews
FXCM information and reviews
NordFX information and reviews
MultiBank Group information and reviews
MultiBank Group
Vantage information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.