USDZAR Holds Ground Ahead of SARB Rate Decision

The South African Rand (ZAR) is currently holding its ground against the US Dollar (USD) ahead of the crucial South African Reserve Bank (SARB) interest rate decision later today. Market participants are cautiously optimistic, with expectations leaning towards the SARB keeping rates unchanged at 8.25%. 

These expectations come despite recent inflation figures ticking up to 5.6% in February, edging closer to the upper band of the SARB’s target range of 3%-6%. However, analysts predict a downward trajectory for inflation over the next year, prompting the wait-and-see approach from the central bank. 

Adding another layer of complexity is the influence of the US Federal Reserve’s monetary policy. Potential future rate cuts by the Fed could create a more dovish environment, allowing the SARB to potentially follow suit later in the year. 

Technical Analysis  

The 4-hour shows that the currency pair is currently trading at R18.94329, caught in a tug-of-war between bulls and bears. The price action is hovering around the 50.00% Fibonacci retracement level after encountering resistance above a supply zone. This indecision is evident as the price trades near the 20-SMA (green line), with the 50-SMA (blue line) recently crossing above the downward-sloping 100-SMA (orange line). 

The RSI (53.02) trading above the 50.00 level suggests potential bullish momentum. Therefore, a sustained breakout above the supply zone could see the USDZAR target the 61.80% Fibonacci retracement level (R19.05199) as the initial resistance. A confirmed break above this level could open the door to the 78.60% Fibonacci retracement level (R19.20101) and potentially R19.39084. 

Conversely, a decline below the 50.00% Fibonacci retracement level, reinforced by the 20-SMA, could bring the 38.20% Fibonacci retracement level (R18.84265) into play. A significant break below R18.84265 could see the 23.60% Fibonacci retracement level (R18.71314) and the R18.61336 support level targeted by the bears. 


The USDZAR price action hinges on the upcoming SARB interest rate decision. If the bank maintains the status quo, as expected, the focus will shift back to the US Federal Reserve’s monetary policy decisions and their impact on the global financial landscape. Technically, a breakout above the supply zone opens the door for further bullish momentum, whereas a decline below the 20-SMA and the 50.00% Fibonacci retracement level could see the bears take control in the near term. 

Sources: TradingView, Trading Economics, Reuters, MarketScreener. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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