It’s looking like a pretty quiet week ahead with Thursday being a public holiday in the US and not a huge amount of data to get the market to do anything significant.

The only story doing the rounds at the moment is that the market has priced in a 90% chance of a rate cut in the US at the next Fed meeting, but recent comments from 2 voting members have been interpreted as pointing to a non-cut.

So this has the market a little confused at the moment and it seems that this week could be a USD dominated theme but we are expected to trade within a fairly narrow range this week in quiet trading conditions.

As for USDZAR, I mentioned last week that our upside target as a result of the double bottom at 6.42-44 was 6.83. The market ended up making a high around 6.84 (which is close enough) and then has subsequently dropped back to test the neckline of this pattern at 6.63.

We are currently trading above this key 6.63 level and it is important for price to remain above this level in order to move higher. This is the key level for this week and as long as price holds above this level then we can expect to see prices move higher in the short-term.

My personal view is that we could see a strong upside move from current levels but if we drop back in the 6.50’s then my view is back to neutral. It is imperative that we hold at current prices.

For the week ahead, please keep an eye on the below levels:

6.84 – Last week’s high. A break above will be very positive for a strong bullish move
6.70 – Current price
6.63 – Neckline of double bottom. Price must hold and close above this level this week to confirm the double bottom. If it does, then we should go higher.
6.42 – 2007 low. Price must not break below this level if we are to go higher. This is our key level within the medium term trend.

I would expect this week to be fairly quiet with maybe a slight upside bias supported by the technical and fundamental position of the ZAR.

Good luck and all the best for the week ahead.

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