Today, the South African Rand is trading lower vs. the US Dollar (USDZAR), and many other of its other peers such as the Euro as emerging markets currencies are under pressure. The USDZAR pair is now at risk of trading to the August 23 low of 15.08.
Last week, the South African Rand reached a low of 14.50 as it, in line with most emerging currencies gained on increased risk appetite. Stock markets such as the S&P 500 also neared their record highs.
However, over the weekend geopolitical risks increased dramatically, as Saudi Arabia saw some of its crude oil production facilities in flames, as they had been attacked. It is not clear who attacked them, but the US government is suggesting that it could be Iran. If it can be proven then geopolitical risks will increase further. The increased geopolitical risks should send the ZAR lower.
The South African economy is also a large crude oil importer, and crude oil prices are up by 13% in the last few days.
Technically, the USDZAR looks to have carved out a low at last week’s low of 14.50. Yesterday, the price jumped higher as the new week started, and the price has traded higher ever since. Today, the price is trying to trade above the median line at 14.78, and if successful the USDZAR could reach the September 5 high at 14.90, followed by the August 23 low at 15.07. The short-term trend will remain upwards as long as the price trades above last week’s low of 14.50.