- The US dollar has launched higher during the trading session on Thursday, as traders look likely to continue to pay close attention to the Federal Reserve monetary policy and whether or not the inflation situation continues to be a major factor in what happens next.
- After all, the Core PCE Price Index comes out on Friday, and it makes a certain amount of sense that traders may be a little bit cautious about putting too much money into the market ahead of that crucial announcement, and therefore it makes a certain amount of sense that short sellers got out of the way.
Technical Analysis
The technical analysis of the USD/ZAR currency pair is bullish of the last couple of days, but we are broken above the 18.25 level, showing signs of life. We also broke above the 50-Day EMA so that’s a positive sign, but with the massive candlestick reform during the trading session on Thursday, it is possible that we could run into a bit of exhaustion. If we break above the 50-Day EMA and can hang onto that move, then we could go looking to the 200-Day EMA near the 18.60 level. That obviously is a very crucial technical indicator that a lot of people will be paying close attention to. After that, then you are looking at the market reaching the 19 ZAR level for the next major significant region.
Keep in mind that the Core PCE Price Index will have a major influence on what happens with the greenback. If it comes out hotter than 0.1% month over month, that could send the USD/ZAR pair much higher, due to the fact that the emerging market currencies will continue to see a lot of negativity as it could punish some of these highly risky economies. On the other hand, if we see the Core PCE Price Index coming out cooler than anticipated, traders may jump in and try to short the US dollar due to the fact that interest rates could very well fall from here. In that environment, if and when we wipe out the bottom of the massive Thursday candlestick, then I think the sellers will jump in and really pressure to the downside.
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