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    IronFX Essential Intraday Comment | 21/07/2015

    •The dollar traded unchanged or lower against almost all of its G10 peers during the European morning Tuesday, in the absence of any major market moving events. It was lower against NZD, CHF, EUR, AUD and CAD, in that order, while it was unchanged against NOK, JPY and GBP. The greenback was higher only against SEK.

    •The South African CPI data to be released on Wednesday are most likely to determine the central bank’s decision on the policy rate the following day. The Bank has been on a tightening cycle since March last year in order to reduce inflationary pressures. Therefore, if the CPI rate for June rises, this could put the SARB under increased pressure to raise interest rates to tackle the inflation challenge. Currently, 15 out of 26 Bloomberg economists expects a 25bps rate hike. If they do hike rates, ZAR could strengthen a bit, but any advance is likely to be short-lived, in our view.

    •USD/ZAR traded lower during the European morning Tuesday, after it hit resistance at the 12.4600 (R1) barrier. The near-term path is sideways in my view, as the pair has been trading between the aforementioned resistance and the support hurdle of 12.3140 (S1), which coincides with the 50% retracement level of the 25th of June – 9th of July advance, since the 13th of July. Therefore, given that the pair found solid resistance at the upper bound of the range today, and that on Thursday the SARB is expected to hike rates, I would expect the decline to continue and perhaps to hit 12.3140 (S1), the lower bound of the sideways path. Shifting my attention at our oscillators, I see that the RSI turned down and just crossed below its 50 line, while the MACD stands slightly above zero but shows signs of topping. It could turn negative again soon. Switching to the daily chart, the rate is still trading above the uptrend line drawn from back at the low of the 31st of October, thus I believe that the major uptrend is still intact.

    •Support: 12.3140 (S1), 12.2200 (S2), 12.1400 (S3)

    •Resistance: 12.4600 (R1), 12.5200 (R2), 12.5800 (R3)

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