USD/ZAR Forecast:
- USD/ZAR edges higher following rising treasury yields
- Psychological level of 15.00 appears to be probable
- USD gains as risk sentiment favors safe-haven currencies
Over the past few weeks, the Rand has been surprisingly strong against major currencies, helped along by a return of US Dollar weakness. Although first world countries have already begun the inoculation process against Covid-19, the discovery of a new variant 501y.v2 deemed the Astrazenaca vaccine to be relatively ineffective, resulting in a lag in the projected rollout program in South Africa.
With the Emerging Market (EM) struggling with Fiscal constraints, increasing US treasury yields boosting the demand for the safe-haven currency, next week’s budget speech will likely have a heavy focus from investors, possibly setting the tables for further rating downgrades in March.
USD/ZAR Price Levels
With rising US Treasury Yields weighing on the volatile ZAR, the downward trajectory that has prevailed in USD/ZAR for the past few months has paused after yesterday’s fresh yearly lows. Price action is currently bouncing off of the confluent Fibonacci retracement levels around the 14.50 spot rate.
USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
With the FOMC meeting on the horizon, price action remains within the zone of confluency between the 50% Fibonacci retracement level of the 2020 move around 14.5 and the declining trendline, which continue to provide support and resistance for the pair. The psychological level of 15.00 continues to hinder further advances, forming a wall of resistance that bulls are eager to breach.
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
