The South African rand is close to a key price level that could decide whether it resumes a year-long strengthening trend or begins to weaken against the U.S. dollar.
The rand went on a losing streak against the dollar after the start of the Iran war as investors sought the U.S. currency as a safe haven and high oil prices were seen as a negative for South Africa's currency.
Before the conflict began on February 28, the rand had been gaining steadily against the dollar since May 2025.
Foreign exchange charts are usually expressed in rand per dollar, meaning the South African currency gains as the price decreases.
In January and February, the rand had pushed the dollar below the 100-month moving average, which is currently at 16.3496, according to data supplied by LSEG. Technical analysts use moving averages to gauge the strength of trends, and monthly charts are particularly useful in understanding long-term price tendencies.
However, in March, the dollar pulled back above the 100-month average, where it has largely remained, though the rand has made several fleeting forays below.
If the dollar were to close the month of May above the 100-month average, it would damage the rand's outlook and increase expectations that South Africa's currency could weaken further, possibly to 17.2525, which was the March high.
However, if the rand pulls the dollar below the 100-month average, traders would expect the South African currency to continue strengthening, possibly to 15.6525, which was the dollar low struck in January.
What the chart shows:
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
