US Dollar Rand (USD/ZAR) Price Outlook:
- Rand shrugs off Eskom woes and rising debt burden after 100 consecutive days of rolling blackouts (load shedding).
- USD faces uncertainty as geopolitical tensions rise.
- USD/ZAR price action faces pressure after brief retest of psychological resistance at 17.700.
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The South African Rand is trading near the key psychological resistance currently resting around 17.7000. With the January low holding at a level of 16.694, a rebound off 17.00 has supported USD/ZAR, pushing prices towards mid-December levels of 17.700.
As USD/ZAR approaches the 2016 high (at 17.8187), both fundamental and technical factors continue to contribute towards ascertaining a clear directional bias.
Despite the economic and political issues currently weighing on the volatile Rand, a firm layer of technical support has formed around the October low of 17.5728.
USD/ZAR Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
Following a solid NFP (non-farm payrolls) report last week, a move above 17.500 allowed USD/ZAR to extend gains before peaking at 17.704. However, with the consecutive four-week rally failing to gain traction above 17.700, price action eased, driving the EM (emerging market) currency back toward the 23.6% Fibonacci (of the 2022 move) level of 17.594.
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For a resumption of the uptrend, USD/ZAR will need to clear 17.700 before retesting 17.7585. With the 2016 high at 17.8187, a move higher and a breach of the December high of 17.9576 could then result in prices moving above 18.00, paving the way for the September high of 18.221.
USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa using TradingView
— Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707