The USD/ZAR is sharply higher after the Rand was hit by spreading riots following the jailing of former President Jacob Zuma on a contempt charge.
Zuma is accused of facilitating high-level corruption during his tenure as president and refused to testify before a commission investigating these charges. He was jailed 15 months for contempt, sparking protests from his supporters, which quickly snowballed into violence over the weekend.
On Monday, the government said it would deploy the army to assist law enforcement agencies in the affected regions of Gauteng and KwaZulu-Natal. Investors fear an escalation of the crisis as Zuma enjoys a lot of support from the local populace. The rand fell 2.2% to the greenback at a stage in Monday’s trading before recovering some of the losses. It still trades 1.69% lower vs the greenback, keeping the USD/ZAR in positive territory on the day.
Technical Outlook for USD/ZAR
The day’s upsurge is challenging resistance at 14.39768. If this level gives way, we could see a push higher towards 14.52995, with additional targets at 14.71708 and 14.89528.
On the other hand, a decline in price keeps the 14.39768 resistance intact. However, only a corrective dip below 14.15360 allows for a resumption of the short-term downtrend seen from March to June 2021, targeting 13.97151 and 13.80403. 13.71791 is also an additional downside target.