South African Rand Dollar Price Forecast: USD/ZAR Bounces Between Key Levels
Rand Price Outlook:
- USD/ZAR Eyes Key Psychological Level
- US Treasury Yields rebound, supporting US Dollar Strength
- Price Action Remains Encapsulated by Key Fibonacci Levels
The South African Rand continues to maintain a certain degree of strength against its major counterparts despite the vaccination program lagging behind both developed and Emerging Markets (EM). Despite the recent reopening of the economy, cash strapped power utility Eskom struggles to keep the lights on, resulting in the reimplementation of load shedding (rolling blackouts), an issue that has hindered economic output for the past decade, placing the economy in a recession prior to the Coronavirus pandemic.
Visit the DailyFX Educational Center to discover why news events are Key to Forex Fundamental Analysis
With the pandemic exacerbating the effects of the recession additional concerns include rising government debt, the high crime rate, corruption and a shrinking tax base, which are all factors that will likely limit the country’s ability to progress in the foreseeable future.
USD/ZAR Technical Analysis
USD/ZAR price action remains below the key psychological level of 15.00, although as inflationary concerns dissipated, a rebound in US Treasury Yields awakened a fresh demand for the greenback, pressurizing the volatile Rand.
With the final approval of Biden’s $1.9 Trillion package deal being priced into the markets, focus now resides with next week’s FOMC meeting, which is expected to include an array of important information, potentially catalyzing price action further.
DailyFX Economic Calendar
From a technical standpoint, after retracing off of the 38.2% Fibonacci retracement level of the move between August 2020 high and the February 2021 low, bears managed to drive prices below prior support, formed by the 15.00 psychological level. Currently, prices continue to test the 14.4% Fibonacci retracement at 14.88, providing support for the pair while the Moving Average Convergence/Divergence (MACD) remains above the zero line, indicating that bullish momentum may still prevail, with a break of 15.00 seeing the next level of resistance holding at 15.19, the 23.6% retracement level of the above-mentioned move.
USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.