How much lower could the dollar fall against the rand?
Sept 24 (Reuters) -With a nine-day drop and a 4.2% depreciation behind it, the question is how much further USD/ZAR can fall. Given the current drivers, yield differentials, improving domestic backdrop and investors' appetite for risk, the answer could be quite a bit further.
South Africa's rand has racked up significant gains versus the U.S. dollar since basing at 18.0175 on Sept. 12 and unless the fundamental and technical backdrop shifts there could be scope for a big figure change in USD/ZAR.
The daily chart is beginning to look stretched with the relative strength indicator dipping below the 30 level and 14-day momentum struggling to confirm the latest USD/ZAR drop to 17.2650.
Longer-term charts are still strongly bearish, however, and suggest the dollar could go much lower. Weekly action has broken below a bearish continuation pattern and has its sights on the key 200-week moving average, currently at 16.8824.
The monthly chart provides a target for the underlying USD/ZAR bear trend. A January 2025 16.2575-16.2970 Ichimoku cloud twist is some way off the current price but twists can appear to attract the market.
Overall, fundamentals and charts suggest any corrective rebounds in USD/ZAR are likely to be limited and attract new selling interest.
For more click on FXBUZ
USD/ZAR Weekly candle Chart: https://tmsnrt.rs/3XU9lO9
USD/ZAR monthly Ichimoku chart: https://tmsnrt.rs/4dkFLFM
Peter Stoneham is a Reuters market analyst. The views expressed are his own, editing by Ed Osmond
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