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USD/ZAR Forecast: Rand Donates Recent Gains as SA Enters Level 4 Lockdown

USD/ZAR Forecast: Rand Donates Recent Gains as SA Enters Level 4 Lockdown

Tammy Da Costa, Analyst

Rand Dollar Price Action:

  • South Africa enters into level 4 lockdown restrictions, business confidence falls
  • USD/ZAR Volatility remains heightened in anticipation of NFP’s
  • Visit the DailyFX Educational Center to discover why news events are Key to Forex Fundamental Analysis
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South Africa has entered into Level 4 lockdown in an attempt to curb the spread of the new Delta variant that continues to spread panic across the nation.

Although USD/ZAR price action has remained on a downward trajectory (YTD) against the US Dollar, the combination of fear and uncertainty is expected to weigh on the volatile Rand, as hopes of a swift economic recovery falter.

USD/ZAR Forecast: Rand Donates Recent Gains as SA Enters Level 4 Lockdown

Source: Refinitiv

USD/ZAR Technical Analysis

A shift in risk sentiment has provided USD/ZAR bulls the opportunity to regain control over the short-term systemic trend, pushing prices into a level of resistance, formed by the 38.2% Fibonacci retracement level of the March – June move at 14.23. Although the downward trajectory persists for now, prices remain above both the 20 and 50-Day Moving Average while the Standard Deviation (a measure of volatility) remains heightened.

USD/ZAR Daily Chart

USD/ZAR Forecast: Rand Donates Recent Gains as SA Enters Level 4 Lockdown

Chart prepared by Tammy Da Costa using IG

Non-Farm Payrolls Takes Center Stage

With global inflationary concerns gaining traction, the release of Non-Farm Payrolls on Friday has the potential to catalyze price action further, as the Federal Reserve remains under pressure to address the surge in inflation.

USD/ZAR Forecast: Rand Donates Recent Gains as SA Enters Level 4 Lockdown

Source: Refinitiv

For now, current resistance holds firm at 14.23 with the declining trendline forming an additional barrier of resistance at 14.35. If this level is broken, the key psychological of 14.50 may be the potential target for the short-term move should a bullish bias persist.

--- Written by Tammy Da Costa 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.

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