BRICS currencies movement for the week – 26 September 2020

Horrible week for the Rand. Yes, it was partly due to USD strength, but mostly due to Rand weakness. Bottomline is the Rand lost 5% of its value against the US Dollar, in one week. Ouch!

BRICS currency/USD movements for this week:

Brazil -3.1%
Russia -3.1%
India -0.2%
China -0.8%
South Africa -4.7%

Euro /USD -1.7%

Technically, the ZAR crossed above all four the 8-, 21-, 50- and 200-day Exponential Moving Averages (EMA), like the movement we saw in the beginning of August. Like that movement, we also saw the 8-day EMA break above the 21-day EMA, which over the shorter-term, is not good for the ZAR at all. If we see a repeat of the August movement, we could most probably see the USDZAR test R17.65 soon.

If this was a false break and we see the ZAR break and stay below both the 50-day EMA (at R16.89) and 21-day EMA (R16.78) this week, we could see it move back to the strong R16.50 support level again.

The 14-day RSI not in overbought territory yet, which will have me cautious taking any long positions on the Rand (short USDZAR) yet. Momentum still seem to be against the Rand, which tend to make me believe that the R17.65 levels might just be tested over the shorter-term.