The South African Central Bank may cut the rate at its next meeting in July
The South African Reserve Bank kept the rate unchanged at its last meeting on May 23, but noted the possibility of its reduction in the future. Will the EURZAR rise?
Such a movement is observed in case of the strengthening of the euro and weakening of the South African rand. The rate of the South African Reserve Bank is 6.75%, which is noticeably higher than the 4.4% inflation. The regulator is considering the possibility of a rate cut in order to maintain the economic growth in South Africa. This can have a negative impact on the exchange rate of the rand. The South African Reserve Bank lowered its forecast for the GDP growth in South Africa in 2019 to 1%, while in January it expected + 1.5%. In turn, the euro strengthened amid the resignation of British Prime Minister Theresa May and the defeat of the Euroskeptics party in Denmark at the European Parliament elections. Amid the worsening of the US-China trade war, the European currency may become more attractive for investors.
On the daily timeframe, EURZAR: D1 approached the upper boundary of the long-term triangle. Before opening a buy position, it should be breached up. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of a slowdown in the growth of the South African economy and the strengthening euro.
Summary of technical analysis
Position Buy
Buy stop Above 16.3
Stop loss Below 15.8
The South African Reserve Bank kept the rate unchanged at its last meeting on May 23, but noted the possibility of its reduction in the future. Will the EURZAR rise?
Such a movement is observed in case of the strengthening of the euro and weakening of the South African rand. The rate of the South African Reserve Bank is 6.75%, which is noticeably higher than the 4.4% inflation. The regulator is considering the possibility of a rate cut in order to maintain the economic growth in South Africa. This can have a negative impact on the exchange rate of the rand. The South African Reserve Bank lowered its forecast for the GDP growth in South Africa in 2019 to 1%, while in January it expected + 1.5%. In turn, the euro strengthened amid the resignation of British Prime Minister Theresa May and the defeat of the Euroskeptics party in Denmark at the European Parliament elections. Amid the worsening of the US-China trade war, the European currency may become more attractive for investors.
On the daily timeframe, EURZAR: D1 approached the upper boundary of the long-term triangle. Before opening a buy position, it should be breached up. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of a slowdown in the growth of the South African economy and the strengthening euro.
- The Parabolic Indicator gives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. Both Bollinger bands are titled upward.
- The RSI indicator is above 50. It has formed a positive divergence.
- The MACD indicator gives a bullish signal.
Summary of technical analysis
Position Buy
Buy stop Above 16.3
Stop loss Below 15.8