We have seen volatility return to emerging market currencies as the Turkish Lira lost over 5% in yesterday’s trade and is continuing its downward spiral. Locally the Rand (ZAR) is also feeling the impact and was lower over 1% in early morning trade and reached the R13.94 level.

The Rand (ZAR)

We might see the Rand (ZAR) strengthen through the course of the trading day but as long as Emerging Market currencies are under pressure and the Dollar (USD) strengthens the outlook for the Rand is that it will continue to weaken in the short term.

Source: Bloomberg

Dollar index (DXY)

Looking at the chart of the Dollar (DXY) we can see that the price action has finally broken out of the Ascending Triangle chart pattern at the 95.53 level which it has been testing for some time now. The Dollar (DXY) might retrace to test the breakout level before moving higher once more. If the Dollar continues to strengthen that will also add pressure on the Emerging Market currencies.

Source – Bloomberg

EUR/USD

The EUR/USD currency pair has broken out of the pennant chart pattern and is moving lower. If the Dollar strengthens we might see the currency pair move lower from current levels. Keep an eye on the Dollar (DXY) movement before adding on to your short as both the currency pair (EUR/USD) and the Dollar (DXY) might pullback before moving lower.

Source – Bloomberg

GBP/USD

The Pound (GBP) has been moving lower for some time now due to political and economic uncertainty from BREXIT. The weakness in the Pound (GBP) might continue if a positive agreement is not reached soon on the BREXIT deal. Adding to the weakness on the GBP/USD currency pair is Dollar strength coming through and this might continue in the short term. Looking at the chart we might see the currency pair continue to move lower if we see a break from the $1.2767 level.

Source – Bloomberg

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