USD/ZAR has extended its losses from the previous session as the South African rand continues to strengthen against the US dollar. To begin with, the Federal Reserve’s dovish tone has heightened the risk appetite in the market. Notably, a risk-on attitude is a bullish catalyst for emerging market currencies while it weighs on the safe-haven status of the US dollar.
Besides, South Africa has had strong economic data with February’s retail sales rising by 2.3% YoY. This is the first time that the country is recording better-than-expected numbers over the past 11 months. Investors are now keen on how USD/ZAR will react to the US GDP data scheduled for today.
USDZAR Technical Outlook
USD/ZAR has extended Wednesday’s losses amid a strengthening South African rand. After hitting an intraday high of 14.4360 in the previous session, the pair is down to its current 14.1593. This is its lowest level since 16th April. On an hourly chart, it is trading below the 25 and 50-day exponential moving average. Besides, it has gotten into the oversold territory with an RSI of 24.
In my opinion, USD/ZAR will take a breather from its downward momentum even as the bearish outlook remains. It is likely to rise to 14.2000 where it will experience some resistance. The bulls may manage to push it to 14.2500. If that happens, it will trigger range-bound trading between 14.2500 and 14.2000 in the near term before it heads back down. However, this thesis will be invalid if the pair moves past 14.2500 on the upside.
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