South African Rand Dollar Price Forecast: USD/ZAR Poised for Bullish Breakout?
USD/ZAR Talking Points:
- USD/ZAR remains stable above Key Psychological Level of 14.00
- Jacob Zuma (former SA president) begins prison sentence on charges of contempt, political tensions rise
- US Dollar strength and commodity prices remain primary catalysts for the ZAR
- Fundamentals begin to falter as SA continues its fight against the Delta variant
With all factors considered, the volatile Rand has had an impressive year against its major counterparts, demonstrating a strong degree of resilience that managed to sustain the bearish narrative pertaining to USD/ZAR up until now.
With price action currently consolidating within a well-defined range, a rebound in the greenback may provide bulls with the momentum required to change the direction of the systemic trend.
Visit the DailyFX Educational Center to discover why news events are Key to Forex Fundamental Analysis
As the country nears the end of the two week level 4 lockdown restrictions, concerns regarding the ongoing battle with rising Covid-19 cases, corruption and unemployment are weighing in on the economy, placing an immense amount of pressure on businesses and consumers who have received little support from the government.
USD/ZAR Price Setups
USD/ZAR price action currently remains trapped in a well-defined range between key Fibonacci levels of the 2021 move. After rising above former support, which continues to hold at the key psychological level of 14.00, USD/ZAR has risen above prior trendline resistance causing prices to temporarily stall at the 38.2% retracement, holding as short-term support at 14.23.
Although the formation of a Doji candle (yesterday) is suggestive of indecision, the Moving Average Convergence/Divergence (MACD) remains well-above the zero line suggesting that bullish momentum remains favorable, at least for now.
USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa using IG
--- Written by Tammy Da Costa on behalf of 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.