- The US dollar has rallied slightly against the South African Rand during the trading session on Friday, which was Good Friday.
- Obviously, there’s a situation where the market has a lack of liquidity, so it does make a certain amount of sense that we would see the markets be a bit lackluster in general.
- That being said, it is interesting that the US dollar is starting to recover from a pretty significant sell off, perhaps due to traders not wanting to short the US dollar heading into the weekend.
After all, most of what we have seen has been in reaction to the tariffs, and it’s possible that some deals might be made over the weekend. For example, Pres. Donald Trump has mentioned that things are going very well with Japan at the moment.
As soon as the Japanese set an agreement with the United States, this puts more pressure on China, especially as other countries will as well. That being said, eventually the United States and China will come to some type of trade agreement, because quite frankly, the 2 economies are far too interconnected.
When We Get a Deal, Volatility Will Explode
I suspect that once we get some type of deal with many of the world’s major economies, volatility will probably explode. I think at that point in time, you will see more money flowing back into the United States, because a lot of large money traders and funds will want to take advantage of the yields in America while they still exist. Remember, the world’s global economy runs on US dollars, despite the fact that we have seen the reaction that the greenback has suffered over the last couple of weeks. Eventually, people and countries will stop hoarding those dollars, and that means a reversal of monetary flows.
Ultimately, this is a pair that I think will turn right back around given enough time, but I think you are at the whims of headline risk. The 50 Day EMA sits right around the 18.60 ZAR level, which could offer a little bit of technical support as well. Furthermore, we are essentially at the 50% Fibonacci retracement level from the spike higher that we had seen in this USD/ZAR pair a couple of weeks ago as well.
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