The USDZAR currency pair has recently witnessed a notable surge in favour of the Greenback. Over the past fortnight, the Rand has experienced setbacks against the US Dollar, with the USDZAR pair marking a significant gain of 1.11% in the past week alone. This movement underscores the resilience of the US Dollar amidst global economic uncertainties.
Several factors have influenced this trend. Heightened geopolitical tensions, particularly in the Middle East and the Russia-Ukraine conflict, have prompted investors to seek refuge in safe-haven assets such as the US Dollar and Gold.
Additionally, recent economic indicators have painted a mixed picture. While South Africa’s inflation showed a slight deceleration in March to 5.3%, suggesting a potential case for future rate cuts, robust US economic data, including strong retail sales and lower-than-expected jobless claims, have bolstered the case for a resilient US economy and potentially inflationary pressures. As markets await the release of key indicators, such as the PCE Price Index, traders remain attentive to signals that could hint at future US monetary policy decisions, impacting the dynamics of the USDZAR pair.
Technical
The USDZAR price action has been indicative of a strong uptrend, with the pair trading above its 100-day moving average, signalling bullish momentum. A notable aspect supporting this trajectory is the ascending channel pattern, reaffirming the pair’s upward movement.
Recent price action saw the formation of support around the 18.92239 level, aligning closely with the lower boundary of the ascending channel. However, the pair surged towards the year-to-date high, reaching the 19.38279 level, where resistance materialized amid overbought RSI conditions, prompting a pullback.
During the retracement phase, the pair retraced to the significant 61.80% Fibonacci Retracement Golden Ratio. Whether this level serves as a point of interest for buyers, potentially leading to a resurgence in bullish momentum towards retesting the resistance level at 19.38279, remains to be seen. Market sentiment suggests that if bearish pressures persist, the 18.92239 support level may attract the attention of bearish traders.
Summary
In conclusion, the USDZAR pair has demonstrated a recent surge in favour of the US Dollar, driven by geopolitical tensions and robust US economic data. While trading in an uptrend above its 100-day moving average, it faces resistance near 19.38279 and finds support around 18.92239. Traders likely await key indicators for further direction.
Sources: Statistics South Africa, U.S. Census Bureau, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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