RAND, DOLLAR ANALYSIS
- Ukraine remains under attack, US Dollar benefits from safe-haven appeal
- USD/ZAR grapples with channel support as EM (emerging market) currencies remain vulnerable
- Commodity prices support the South African Rand despite a rise in geopolitical risks
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Rand Resilience Holds Firm Despite Elevated Geopolitical Risks
USD strength has recently weighed on the volatile Rand as the war between Russia and Ukraine remains at the forefront of risk sentiment.
Despite a fairly optimistic South African budget speech earlier this week, a shift in the global geopolitical environment prevented the USD/ZAR from falling below the key psychological level of 15.000 as investors fled to the safe-haven Dollar.
Given an increase in the severity of sanctions imposed against Russia and its president Vladimir Putin, the invasion of the Ukraine capital has raised additional concerns over supply constraints which have already exacerbated the effects of rising inflation.
However, unlike other EM (emerging market) currencies who have succumbed to the pressure of safe-haven retreat, commodity rich South Africa has remained fairly competitive against the greenback as a surge in the price of metals supports the ZAR.
USD/ZAR TECHNICAL ANALYSIS
After temporarily falling below 15.000 earlier this month, the global fundamental backdrop has allowed USD bulls to retaliate, driving price action back towards the lower bound of the longer-term channel while threatening the upper bound of the short-term bearish channel.
USD/ZAR WEEKLY CHART
Chart prepared by Tammy Da Costa using TradingView
As the key psychological levels of 15.000 and 16.000 remain as critical support and resistance for the imminent move, the 50 and 200-day MA (moving average) is currently encapsulating price action, pushing the pair into a potential zone of consolidation.
USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa using TradingView
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--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
