USD/ZAR, AUD/JPY and USD/BRL Forecast – Carry Trade Continues to Look Strong

USD/ZAR Technical Analysis

The chart in front of you is the US dollar against the South African rand. You can see that we initially did try to rally a bit, but it looks like we are starting to show signs of weakness. The 16 level is an area that could have a little bit of ramifications. If we break down below there, then we could be looking at 15.75.

I have no interest in buying, but if we were to break above 16.5, then it could open up the possibility of a move to the upside.

AUD/JPY Technical Analysis

The Australian dollar fell a little bit against the Japanese yen before turning around and showing signs of life just above the 110-yen level. This is a pair that I think will continue to find buyers on each and every dip, as the Reserve Bank of Australia is likely to rate hike here soon, as opposed to the Bank of Japan that simply cannot. I believe that the 108-yen level will end up being a bit of a floor in this market.

USD/BRL Technical Analysis

The US dollar continues to see a lot of negatives when the market rallies; it just seems like people are willing to jump in and sell off. With this, I do think eventually we could go down to the 5.0 level, we’ll just have to wait and see.

I don’t have any interest in buying the dollar against the Brazilian real. The market is really starting to price in a much stronger real with its 15% interest rate as opposed to the United States, which is 3.75%. At this juncture, anytime it rallies, it looks like an opportunity unless we see some type of economic shock. I think you’ve got a situation where this is a downtrend that’s going to be very strong for quite some time.

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