The USD/ZAR resumed the downside move as it seeks to complete the measured move of the bearish flag pattern due to a weakening US Dollar and a strong Rand that has gained momentum from solid manufacturing data.
On Tuesday, South Africa Manufacturing Production Index (annualized) for March came in at 4.6%, which was far better than the projected outcome of 0.45%. Monthly, this figure came in at 3.4%, better than the 0.4% consensus number and also better than the previous figure of -1.2%.
This data set indicates the improved fortunes of South Africa’s industrial sector. This sector is benefitting from more comprehensive coronavirus vaccination coverage, allowing for better control of the local epidemic.
Bulls on the Rand are capitalizing on carry trade opportunities provided by the interest rate differential between South Africa and the United States.
The USD/ZAR is trading lower on the day by 0.19% as of the time of writing.
Technical Levels to Watch
Price is now challenging the 23 December 2019 low at 13.97151. A breakdown of this level takes the USDZAR towards the 15 July 2019 low at 13.80403, with additional downside targets found at 13.71791 (20 November 2018 low) and the 13.6000 psychological support level.
On the other hand, a bounce on the 13.97151 support allows the bulls to aim for a retest of the 14.15360 price mark. Additional upside targets are seen at 14.28370 and 14.39768.