Time to reassess my position on the rand. I expected the 50-day MA rate of 17.15 to hold support for the pair during Wednesday’s turbulent session but Powell’s dovish comments regarding the Fed’s “successful fight against inflation” sent the dollar packing across the board. Equity markets staged an aggressive rally since Powell failed to decisively comment when questioned whether he was concerned about the stock market’s strong start to the year. The SPX and NDX have rallied roughly 2.67% and 5.76%, respectively, since Wednesday’s Fed rate decision.
Risk-on sentiment certainly gripped the market in the past two session and the rand hopped on and rode the wave all the down to the 200-day MA level of 16.95.
The break below the 38.2% green Fibo rate and the top of the green first impulse wave theoretically invalidates the 5-wave impulse higher towards 17.60 as previously predicted. A break and close below the green 61.8% Fibo retracement rate of 16.99 and the 200-day MA rate of 16.95 will allow the rand to pull the pair back onto the yearly low of 16.70, that is if the current risk-on sentiment is maintained.
On the flip side a close above the 50-day MA rate of 17.15 will see the rand weaken back towards the resistance range of 17.39 and 17.50.
The DXY pulled back most its gains yesterday following the FOMC demolishing of the greenback, so some rationality is coming back to the market. Given the current local uncertainties and easing of commodity prices, particularly platinum, I don’t see the rand holding the pair below the psychological level of 17.00.
Technically the 4h MACD is losing momentum and looks set to cross to a buy signal and the RSI has bounced convincingly off the oversold zone which is rand negative.
Don’t forget about today’s NFP’s print, it has the potential to move the markets later this afternoon.
Risk-on sentiment certainly gripped the market in the past two session and the rand hopped on and rode the wave all the down to the 200-day MA level of 16.95.
The break below the 38.2% green Fibo rate and the top of the green first impulse wave theoretically invalidates the 5-wave impulse higher towards 17.60 as previously predicted. A break and close below the green 61.8% Fibo retracement rate of 16.99 and the 200-day MA rate of 16.95 will allow the rand to pull the pair back onto the yearly low of 16.70, that is if the current risk-on sentiment is maintained.
On the flip side a close above the 50-day MA rate of 17.15 will see the rand weaken back towards the resistance range of 17.39 and 17.50.
The DXY pulled back most its gains yesterday following the FOMC demolishing of the greenback, so some rationality is coming back to the market. Given the current local uncertainties and easing of commodity prices, particularly platinum, I don’t see the rand holding the pair below the psychological level of 17.00.
Technically the 4h MACD is losing momentum and looks set to cross to a buy signal and the RSI has bounced convincingly off the oversold zone which is rand negative.
Don’t forget about today’s NFP’s print, it has the potential to move the markets later this afternoon.