USD/ZAR Outlook: More Downside in Store if FOMC Minutes Are Dovish

The USD/ZAR strengthened slightly on Wednesday after South Africa’s annualized retail sales figure came in at -2.5% for March 2021. This number was much lower than the consensus and previous figures of 1.9% and 2.2%, respectively.
This result allowed the greenback to catch a breather against the rampaging Rand, which has hitherto been attracting bids over the last two months by carry traders.

The USD/ZAR gained 0.26% on the day due to the data set, but buying momentum appears weak ahead of the FOMC minutes. Markets expect the minutes to reflect the current language of several Fed bankers and maintain previously set targets for tapering and rate hikes.

Technical Outlook for USD/ZAR

The USD/ZAR tested the support at 13.9715 but failed to break it once more, setting up an opportunity for a double bottom formation on the daily chart. The neckline of the evolving pattern is at the 14.1536 resistance level. A break of this resistance is required to confirm the pattern. This would set up a measured move towards the 14.39768 resistance level. This move would need to take out the resistance at 14.28370.

On the other hand, a lack of buying momentum on the active candle may allow for a retest of the 23 December 2019 low at the 13.97151 price mark. If this support fails, the 15 July 2019 low at 13.8040 becomes the new target. Below this level, 13.7179 becomes an additional target.

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USD/ZAR Daily Chart

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