The USD/ZAR price is up by more than 1.50% as the South African rand gets under intense pressure. The GBP/ZAR and EUR/ZAR have also risen by 0.85% and 1.12%, respectively.
Why is the South African rand struggling: The biggest reason why the USD/ZAR has risen sharply is that SA has started to experience a new strain of coronavirus. Just yesterday, the country confirmed more than 10,000 cases, which is substantially higher than November’s low of 3,000.
Most of these cases are because of a new strain that is spreading 70% faster. As such, investors are worried that the country’s government will be forced to announce a new round of lockdowns.
What about the dollar: The USD/ZAR is also rising because of the overall stronger dollar. The dollar index has risen by about 0.50% as traders focus on the new stimulus package deal reached in the United States. The $900 billion deal will provide more support to businesses, states, and individuals.
What next for USD/ZAR: On the hourly chart, we see that the USD/ZAR has bounced back after bottoming at 14.5160 last week. It is now trading at 14.766, which is the highest it has been since December 17. The 15-period and 25-period exponential moving averages have also made a bullish crossover.
Therefore, it seems as if bulls are prevailing, which will possibly push the pair up to about 15.00 in the near term.
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