ZAR/JPY Under Pressure Amid Omicron Variant Scare
Tickmill | Nov 30, 2021 08:19AM ET
Following the initial sell-off in ZAR on Friday, as news of the variant first broke, the price has since stalled and remained within the range of that initial day’s decline. For now, the price is continuing to hold support at the 6.964 level.
However, given the downside risks in the outlook, about the Omicron news-flow, and the likelihood that JPY strengthens further on safe-haven demand, the focus is on a continuation lower.
The potential decline is supported by bearish MACD and RSI readings. With this in mind, bears can look for a break of Friday’s lows (sub 6.964), targeting a move down to the 6.669 level initially and a test of the channel low.
h2 Keep An Eye On/h2The critical issue here is news around the Omicron variant. If incoming information worsens, this will increase the pressure on ZAR and increase the safe-haven demand for JPY, driving ZAR/JPY lower.
If news flow lightens up, for example, if scientists declare the strain is not as lethal as thought or is more responsive to vaccines than first thought, this will likely fuel a reversal in the current dynamic.
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