The USD/ZAR price was under pressure in the overnight session even after the weak South African unemployment rate data. The pair declined to 14.9800, which was the lowest level since August 19. It is about 2.45% below the highest level last week.
South Africa unemployment rate
Recently, South Africa has seen a substantial uptick in protests after the imprisonment of Jacob Zuma, the country’s former president. The impact of these protests on the economy has started coming out.
On Tuesday, data by the South African statistics agency revealed that the overall unemployment rate rose to 34.4% in the second quarter. This was a substantial increase from the previous quarter’s 32.4%.
As a result, data tracked by Bloomberg shows that the country has the highest unemployment rate in the world. This number includes countries that are monitored by Bloomberg. At the same time, the overall unemployment rate, including people not looking for work, rose to 44%.
Analysts expect that the situation will get worse because of the recent curbs on movement as the government tackles the new Covid wave. Also, there is a general fear that the state of inequality coupled with vaccine mandates will push more people to the streets.
The USD/ZAR, therefore, declined because of the overall risk-on sentiment in the market. This has pushed the US dollar lower and key assets like airline and energy stocks higher. Cryptocurrency prices have also rebounded as traders wait for the Jackson Hole summit.
USD/ZAR technical forecast
The four-hour chart shows that the USD/ZAR has formed what looks like a break and retest pattern. See, the pair managed to move above the key resistance level at 15.00 last week. This was a notable level because it was also the highest level on June 26.
Now, the pair has retreated and retested this support level. Therefore, there is a possibility that the USDZAR will resume the bullish trend soon. A more bullish breakout will happen when it moves above the last week’s high at 15.3900. This view will be invalidated if the price moves below 14.80.