BRICS currencies movement for the week – 19 June 2020

Tough week for the Rand (ZAR). Movement was however in line with most BRIC currencies and mainly due to USD strength.

BRICS currency/USD movements for this week:

Brazil -4.9%
Russia +0.9%
India -0.3%
China +0.2%
South Africa -1.6%

Euro /USD -0.7%

Technically, the ZAR remained within the parallel channel, with the top resistance level being tested twice in the latter part of the week. We also saw the 50-day Moving Averages (EMA) acting as a very strong resistance level.

The 14-day RSI moved out of EXTREME OVERSOLD (overbought from a ZAR perspective) environment, which could see the ZAR starting to gain momentum again.

I will still be monitoring the R17.50/USD on the Rand very closely. A break and close above the parallel channel (above R17.65), could very much see the ZAR back at R18.30 - R18.35.

Should we however stay below the R17.50 levels and possibly break the 8-day EMA at R17.18, we could see the ZAR testing 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 (R16.30), with a break and close below, very much putting us back at my medium-term target, R15.50.

I would however caution any positions prior to a confirmation-break below R16.50 and will remain Neutral for now. Most likely trading band this week is being between R17.15 and R17.65.