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FxWirePro: USD/ZAR rises as hot US inflation boosts Fed rate hike bets

• USD/ZAR strengthened on Wednesday as the US dollar firmed following a hotter-than-expected US inflation reading, boosting expectations of a Federal Reserve rate hike later this month.

• The US Consumer Price Index increased 0.6% in September, accelerating from a 0.4% rise in August, the Labor Department’s Bureau of Labor Statistics reported on Wednesday..

• Expectations for a US rate hike this month rose to 44% from 22% before the inflation report, while markets see a 95% likelihood of a rate increase in December, CME's FedWatch Tool showed..

• In the absence of key local economic data, the rand will take direction from external factors, including US economic releases and geopolitical developments.

• Immediate resistance is located at 16.675  (38.2%fib), any close above will push the pair towards 16.752(Higher BB).

• Strong support is seen at 16.444(50%fib) and break below could take the pair towards 16.231(61.8%fib)

Recommendation: Good to buy around 16.600 with stop loss of 16.300 and target price of 16.800

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