The USD/ZAR price action over the past few months allows analysts at Rabobank to use the 2011-2016 rally as a yardstick to obtain higher targets with a relatively high degree of confidence.

Key quotes

“If we use the 2011-2016 rally as a yardstick, USD/ZAR has already exceeded the Fibonacci 61.8% extension and is on track to revisit the 76.4% extension at 19.4868. Before the 100% extension at 21.9515 comes into focus, USD/ZAR would have to clear the psychological level of 20 first.”

“The only issue we have with the bullish view on USD/ZAR is the rapid pace of recent gains that resulted in a parabolic move higher. The higher USD/ZAR trades in the coming days, the bigger the risk of a sudden correction.” 

“We would prefer to witness a proper corrective short-term pullback in the very near-term before USD/ZAR pushes higher. We have to admit, however, that waiting for such a correction could be a pointless exercise, so strong is the bullish momentum at this stage.”