Rand Price Outlook:
The South African Rand (ZAR) has recently traded within a well-defined range against its major counterparts, largely buoyed by US Dollar weakness and an increase in the demand for major commodities, primarily Platinum and Gold.
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However, South Africa’s economic outlook remains a controversial topic as credit rating agencies continue to scrutinize the Emerging Market (EM), maintaining a relatively pessimistic view. Despite reporting a budget surplus, rating agency Standard & Poor (S&P) has expressed concerns over SA’s exorbitant levels of government debt, indicating that South Africa may face further downgrades in the foreseeable future.
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Meanwhile, the largest economy in Africa continues to face established obstacles that have been exacerbated by the Coronavirus pandemic, which continues to hinder prospects of an economic recovery.
USD/ZAR Technical Analysis
USD/ZAR price action continues to be held to ransom by the 8-period Exponential Moving Average (EMA) whilst key Fibonacci retracement levels continue to provide support and resistance for the pair.
For now, prices continue to trade within a well-defined range (between 14.37 and 15.55), formed by the 76.4% and 100% retracement level of the 2020 – 2021 move. However, the 15.00 psychological level has recently provided additional resistance for the bulls with the Relative Strength Index (RSI) maintaining a natural stance
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USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
Although the downward trajectory currently prevails, Friday’s US non-farm payrolls report (NFP), combined with President Joe Biden’s detailed additional $2 trillion infrastructure plans may induce volatility, with the US Dollar remains the primary catalyst for the volatile Rand.
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GBP/ZAR Technical Analysis
After breaking through trendline support, bears continue to drive prices lower, eager to break through the next level of support, currently residing at 20.03, the 14.4% Fibonacci retracement level of the 2020 move.
Currently, GBP/ZAR price action remains below the 8-period EMA, with an RSI reading of 36 suggestive that the pair may be poised to test oversold territory should downward pressure persist.
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GBP/ZAR Daily Chart
Chart prepared by Tammy Da Costa using IG Charts
EUR/ZAR Technical Analysis
Europe’s vaccine rollout program has faced its own challenges, resulting in the reimplementation of fresh lockdown measures, allowing EUR/ZAR bears to drive prices below the descending triangle and towards the current support level, holding at 17.00.
Concurrently, the RSI has fallen to the 30 mark, a possible indication that the pair may soon be entering into oversold territory.
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EUR/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
— Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
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