Tuesday, May 30, 2023

USD/ZAR Gains as Protests and Lockdowns Overshadow Muted Dollar


USD/ZAR Price Outlook:

  • USD/ZAR Breaks above Resistance, upside prevails for now
  • US Dollar remains the primary catalyst for USD/ZAR trajectory as major event risk nears
  • Violent protests spread fear across Johannesburg, South Africa’s largest city

South Africa’s Economic Outlook: Violent Protests, Extended Lockdowns and an Edge for USD/ZAR

USD/ZAR has entered the week higher, buoyed by violent protests and extended lockdown measures that continue to bring the South African economy to its knees. With prices now hovering around 14.40, the week ahead may provide for some big moves in USD/ZAR price action and potentially a new systemic trend.

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As discussed in Friday’s article, the arrest of former South African President Jacob Zuma has resulted in further political turmoil, a key catalyst for the Emerging Market (EM) currency. However, over the weekend, protests turned violent as Zuma supporters targeted South Africa’s largest city and business hub (Johannesburg), resulting in millions of Rand’s worth of damage to an already somber economy.

USD/ZAR Price Setup

USD/ZAR is nearing a critical level of resistance at the key psychological level of 14.50 as prices continue to edge higher. After breaking above the 38.2% Fibonacci retracement of the 2021 move, bulls are eager to drive prices back to the 15.00 with the hope of gaining control of the prominent trend.

USD/ZAR Daily Chart

USD/ZAR Daily Chart

Chart Prepared by Tammy Da Costa using IG Charts

With prices trading above both the 50 and 100-Day Moving Average, the Moving Average Convergence/Divergence (MACD) remains well-above the zero line suggesting that bullish momentum remains favorable, at least for now.

Chart prepared by Tammy Da Costa using IG

— Written by Tammy Da Costa, Market Writer for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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