USD/ZAR Price Forecast: Rand Preps for Fed and SARB

RAND TALKING POINTS & ANALYSIS

• SA inflation to provide SARB with valuable information.
• Both SARB and Fed to keep rates steady.
• USD/ZAR trades at a key inflection point that could break either way depending on incoming data.

USD/ZAR FUNDAMENTAL BACKDROP

The rand faces an important week ahead as traders prepare for both Federal Reserve and South African Reserve Bank (SARB) interest rate decisions respectively (see economic calendar below). Both central banks are expected to keep rates on hold but forward guidance will be key. South African inflation will provide some insights into the SARB’s motive to bring inflation down to their target level. With crude oil prices on the up, headline inflation will be closely watched.

From a US dollar perspective, the Fed is likely to keep the door open for additional rate hikes should incoming data necessitate. A higher for longer message will not bode well for the rand considering the South African economy is not as robust as the US.

USD/ZAR ECONOMIC CALENDAR (GMT +02:00)

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

USD/ZAR DAILY CHART

Chart prepared by Warren Venketas, TradingView

Daily USD/ZAR price action has changed little since last week as bulls look to breach the medium-term trendline resistance (black) that coincides with the 19.0000 psychological handle. There may be a developing ascending triangle at play (dashed black line) that could result in subsequent upside. Fundamental factors above will be the likely catalyst if this is to occur and will require a hawkish slant to the Fed over the SARB. Currently, recent doji closes indicate hesitancy from USD/ZAR traders who are clearly on edge ahead of a big data week.

Resistance levels:

• 19.5000
• 19.1522
• Trendline resistance

Support levels:

• 19.0000
• 18.7759
• 50-day MA (yellow)
• 18.5000

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