TALKING TECHNICALS: Revisiting the rand
Currency movements merit fresh consideration, given recent technical breaks
The charts of the US dollar index and the rand-dollar exchange rate were covered in this column last month.But some meaningful technical breaks have occurred over the past few weeks, so it is worth revisiting those charts, as they have an important bearing on SA investors.The US dollar has continued to strengthen, and has pushed beyond the 95 level that marks the neckline of a large inverted head and shoulders pattern on the US dollar index. That break is a bullish break for the greenback, and it projects further strength for the US unit. The inverted head and shoulders pattern projects a move to 101.50 over the medium term.With the US Federal Reserve on a determined path to raise interest rates — compared with other developed countries, which are keeping rates at artificially low levels — the dollar is likely to continue to attract flows seeking a higher yield. While this interest rate differential remains intact, it is likely that the dollar will have the wind at its back for the ...
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