Rand Price Outlook:
- USD/ZAR remains at the mercy of US fundamentals
- GBP/ZAR threatens critical support
- EUR/ZAR breaks below key psychological support
The South African Rand (ZAR) has recently traded within a well-defined range against its major counterparts, largely buoyed by US Dollar weakness and an increase in the demand for major commodities, primarily Platinum and Gold.
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However, South Africa’s economic outlook remains a controversial topic as credit rating agencies continue to scrutinize the Emerging Market (EM), maintaining a relatively pessimistic view. Despite reporting a budget surplus, rating agency Standard & Poor (S&P) has expressed concerns over SA’s exorbitant levels of government debt, indicating that South Africa may face further downgrades in the foreseeable future.
Meanwhile, the largest economy in Africa continues to face established obstacles that have been exacerbated by the Coronavirus pandemic, which continues to hinder prospects of an economic recovery.
USD/ZAR Technical Analysis
USD/ZAR price action continues to be held to ransom by the 8-period Exponential Moving Average (EMA) whilst key Fibonacci retracement levels continue to provide support and resistance for the pair.
For now, prices continue to trade within a well-defined range (between 14.37 and 15.55), formed by the 76.4% and 100% retracement level of the 2020 – 2021 move. However, the 15.00 psychological level has recently provided additional resistance for the bulls with the Relative Strength Index (RSI) maintaining a natural stance
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USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
Although the downward trajectory currently prevails, Friday’s US non-farm payrolls report (NFP), combined with President Joe Biden’s detailed additional $2 trillion infrastructure plans may induce volatility, with the US Dollar remains the primary catalyst for the volatile Rand.
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GBP/ZAR Technical Analysis
After breaking through trendline support, bears continue to drive prices lower, eager to break through the next level of support, currently residing at 20.03, the 14.4% Fibonacci retracement level of the 2020 move.
Currently, GBP/ZAR price action remains below the 8-period EMA, with an RSI reading of 36 suggestive that the pair may be poised to test oversold territory should downward pressure persist.
GBP/ZAR Daily Chart
Chart prepared by Tammy Da Costa using IG Charts
EUR/ZAR Technical Analysis
Europe’s vaccine rollout program has faced its own challenges, resulting in the reimplementation of fresh lockdown measures, allowing EUR/ZAR bears to drive prices below the descending triangle and towards the current support level, holding at 17.00.
Concurrently, the RSI has fallen to the 30 mark, a possible indication that the pair may soon be entering into oversold territory.
EUR/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
