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Euro to South African Rand Exchange Rate Losses May Not Last

Euro to South African Rand Tumbles as Rand Takes a Breather from Poor South African Data

Following last week’s concerning South African growth data which caused a South African Rand (ZAR) plummet, the Euro to South African Rand (EUR/ZAR) exchange rate has tumbled on a lack of fresh Euro (EUR) support and a rebounding Rand.

Last week saw EUR/ZAR open the week at the level of 16.30 and briefly dip, before surging strongly as the Rand plunged. EUR/ZAR closed the week on the level of 16.95 after briefly touching a high of 17.03 – the pair’s best level since October 2018.

Since markets opened yesterday though, EUR/ZAR has fallen back from these highs and was trending closer to the level of 16.69 at the time of writing.

The Rand has rebounded thanks to some stronger market trade sentiment, as well as profit-taking from last week’s plummet.

However, if upcoming South African data continues the trend of disappointing ecostats the pair’s losses could be stopped short.

Euro (EUR) Exchange Rates Fail to Hold Ground as Rivals Recover

The Rand has been rebounding from its worst levels, but a big chunk of its gains versus the Euro yesterday were due to a lack of solid support for the shared currency as its rival, the US Dollar (USD), recovered.

The Euro and US Dollar (USD) often see a negative correlation. As the US currency recovered on US trade hopes, investors sold the Euro slightly.

Euro movement was relatively quiet overall too, with German markets closed to observe a public holiday and a lack of notable Eurozone ecostats due for publication until Thursday.

Still, the Euro’s potential for losses is limited. Following a less dovish than expected tone from the European Central Bank (ECB) last week, investors are hesitant to make big moves on the shared currency ahead of further comments.

South African Rand (ZAR) Exchange Rates Rebounding amid Trade Sentiment

Since markets opened this week, the South African Rand has been rebounding solidly from the plummet it saw last week.

Markets are becoming more hopeful that trade tensions between the US and Mexico will not worsen after the two nations reached a deal to prevent US tariffs from being implemented.

The South African Rand is a currency that is often correlated to movements in trade heavy emerging markets. The Rand has been climbing due to strength in the Mexican Peso (MXN) so far this week.

Last week’s losses were on South Africa’s domestic news however, and the recovery this week so far has been more due to global trade sentiment.

As a result, the Rand’s potential for gains is limited and there could still be further weakness ahead.

Euro to South African Rand (EUR/ZAR) Exchange Rate Investors Anticipate South African Data

US Dollar (USD) strength and trade developments have been responsible for the Euro to South African Rand (EUR/ZAR) exchange rate’s losses so far this week, but the pair’s strong gains last week were caused by concerns about South Africa’s economy.

As a result, major South African ecostats have the potential to influence the pair for the remainder of the week if they influence the market’s South African economic outlook at all.

Following the publication of today’s South African manufacturing production report today, South African Rand investors will be anticipating tomorrow’s South African retail sales results from April, and Q2 business confidence data on Thursday.

These stats have the potential to be particularly influential if they surprise investors, as markets are currently anxious about South Africa’s economic outlook.

However, with European Central Bank (ECB) officials holding speeches tomorrow, possible developments in ECB bets and global trade tensions will continue to have an impact on the Euro to South African Rand (EUR/ZAR) exchange rate as well.