The USDZAR pair exhibits resilience, registering a positive 0.48% in the current session and accumulating a weekly gain of 0.78%, leaving the pair on course for a third consecutive session of upward momentum. President Cyril Ramaphosa’s State of the Nation Address offered little detail on addressing the country’s challenges, leaving markets largely unresponsive. Finance Minister Enoch Godongwana’s budget is anticipated to provide crucial insights into government spending priorities, revenue collection measures, and economic forecasts. Until then, the USDZAR pair is expected to lack clear direction.
Globally, the USD remains firm. Strong US jobs data and hawkish Fed rhetoric, particularly from Boston Fed President Susan Collins, dampen hopes for early rate cuts. The Fed is likely to maintain a cautious approach, potentially delaying easing until later in the year. This reinforces the dollar’s strength, impacting emerging market currencies like the ZAR.
Technical
On the 4-hour chart, the USDZAR pair, currently priced at R19.04138, depicts an upward trajectory. The price action trades above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), with the 20-SMA recently surpassing both the 50-SMA and 100-SMA, indicating positive momentum. The RSI, at 67.18, approaches overbought levels.
Short-term trading opportunities may arise if the pair sustains a push above the 23.60% Fibonacci retracement level. Successful advancement could lead to the initial resistance at R19.12857, with further targets at R19.21495 and R19.35762 in the short term. Conversely, failure to maintain upward momentum might trigger a retracement towards the 38.20% Fibonacci retracement level (R18.79133). A break below the initial support could confirm the bearish momentum, likely bringing the 50.00% Fibonacci retracement level (R18.66047) and 61.80% Fibonacci retracement level (R18.52961) into play.
Summary
The USDZAR pair demonstrates resilience with consecutive gains. While the fundamental landscape awaits clarity from the upcoming budget speech, the technical analysis indicates potential for further upward movement. Initial resistance lies at R19.12857 (23.60% Fibonacci retracement), followed by R19.21495 and R19.35762. Initial support sits at R18.79133 (38.20% Fibonacci retracement), followed by R18.66047 (50.00% Fibonacci retracement) and R18.52961 (61.80% Fibonacci retracement).
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
