Rand Dollar Outlook:
In anticipation of the annual South African budget speech, scheduled for 24 February 2021 , the State of the Nation Address (SONA) delivered by President Cyril Ramaphosa last night, set the tone for the economic recovery as investors listened with intent for any signs of potential changes to monetary policy that may be announced as the Emerging Market (EM) continues to face further challenges resulting from the Coronavirus pandemic.
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With the discovery of the dominant South African variant of the virus, the vaccine rollout program remains at the forefront of the economic recovery as other challenges such as corruption, large government debt and the inability of power utility Eskom to keep the lights on, remain a hindrance for business activity and the economic recovery as a whole.
USD/ZAR Price Levels
Despite a rather dim economic outlook, the ZAR has managed to maintain its position below the key psychological level of 15.00, catalyzing off of US Dollar weakness and an increase in risk-on sentiment. For now, price action remains within the zone of confluency between the 50% Fibonacci retracement level of the 2020 move around 14.5 and the declining trendline, which continue to provide support and resistance for the pair.
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USD/ZAR Daily Chart
Chart prepared by Tammy Da Costa, IG
For now, support continues to hold at 14.50 with the next level of support forming at the psychological level of 14.00, last seen in January 2020. However, if buying pressure is strong enough to surpass current resistance of 15.00, then bulls may drive price action toward the next level of resistance at 15.50
USD/ZAR Economic Events
Following the decision to suspend the Astrazeneca vaccine after it proved relatively ineffective against the South African variant, the arrival of the 9 million doses of Johnson & Johnson’s vaccine may further support the Rand as the larger US Fiscal Stimulus package continues to get factored into the market, weighing on the greenback.
( 11:02 GMT )
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Meanwhile, next week’s fundamentals may further drive price action in either direction, focusing on Wednesday’s economic events.
DailyFX Economic Calendar
— Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707