Rand Price Outlook:
The South African Rand has strengthened against its major counterparts ensuing from the release of the second consecutive positive GDP report, further increasing investor sentiment and hopes of an economic recovery. However, the Coronavirus pandemic had exacerbated the effects of an economic recession, pushing unemployment to record highs, causing additional concern around the country’s credit rating. And given the rising level of government debt which coincides with a decrease in revenue as the annual number of South Africans emigrating abroad continues to steepen, there’s been a large burden on wealthier residents to help bridge the gap.
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Meanwhile, with the recent reopening of the economy, the Emerging Market (EM) currently remains restricted from entering numerous countries, hindering the ability of certain sectors recover.
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USD/ZAR Technical Analysis
For the past few days USD/ZAR price action has moved along with a key Fibonacci retracement of the 2020/2021 move. The three month sell-off that ran through mid-December finally found support in the pair around the key psychological level of 14.50, before bulls were able to push price action back above prior resistance of 15.00. With rising US treasury yields supporting the US Dollar recovery, bulls reached a wall of resistance at 23.6% retracement level before the positive economic data gave bears the opportunity to drive prices lower.
Currently, prices continue to test the 14.4% Fibonacci retracement at 15.107, providing support for the pair while the Moving Average Convergence/Divergence (MACD) remains above the zero line, indicating that bullish momentum may still prevail, with 15.50 holding as resistance.
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USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
GBP/ZAR Technical Analysis
A progressive economic recovery and a rapid rate of vaccinations have attributed to rising demand for GBP, with prices increasing along the rising trendline, now providing support; with the MACD indicator resting high above the zero line while the Relative Strength Index (RSI) continues to threaten overbought territory.
For now, the key psychological level of 21.00 remains as support, with the 50% Fibonacci retracement level of the 2020/2021 move providing resistance at 21.56.
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GBP/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
EUR/ZAR Technical Analysis
The upward momentum in EUR/ZAR has continued to trade within a well-defined range, formed by Fibonacci levels of the 2020/2021 move. After retracing from the 50% Fibonacci level, providing resistance at 18.307, bears have managed to push prices below the psychological level of 18.00, back within the boundaries of the Donchian channel. Currently, 18.50 continues to keep bulls at bay while bears look to break below current support, formed by the 61.8% retracement level of 17.686.
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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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