The USD/ZAR price continued its bullish trend as the US dollar index (DXY) continued soaring. It rose to a high of 17.5, which was the highest level since September 9. It has jumped by over 8.69% from the lowest level in August. The South African rand has crashed by 9.97% this year.
South Africa Rand crash
The USD/ZAR exchange rate has been in a strong bullish trend in the past few weeks as investors react to the latest US inflation data. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation jumped by 0.1% in August of this year. Core inflation continued rising. And on Wednesday, data showed that the headline producer price index (PPI) rose sharply in August.
Therefore, analysts believe that the Federal Reserve will continue hiking interest rates in the coming months. It has already increased rates by 225 basis points this year and started to reduce its balance sheet. As such, analysts expect that the bank will hike by 75 basis points in its September meeting.
Meanwhile, the falling South African rand has also boosted inflation in South Africa. Data published last week showed that the country’s inflation soared to a 13-year high of 7.8%, and analysts believe it will continue soaring. As such, the South African Reserve Bank (SARB) will likely keep hiking interest rates in the coming weeks.
USD/ZAR forecast
The daily chart shows that the USD to ZAR price has been in a strong bullish trend in the past few weeks. It has moved above all moving averages, and the ascending trendline is shown in black. The Awesome Oscillator has moved above the neutral point.
Further, the pair is solidly above the important support level at 16.37, which was the highest level in November last year and May this year. Therefore, the pair will likely continue soaring as buyers target the next key resistance level to watch will be at 18. A drop below the support at 17 will invalidate the bullish view.
