The USD/ZAR pair is hovering near its lowest level since January 20 as the dollar sell-off cools. The pair is trading at 14.2695, which is slightly above yesterday’s low of 14.15. It has dropped by more than 25% from its highest level in 2020.
What happened: The USD/ZAR has been under pressure this week because of the weaker dollar. The dollar index has declined by more than 1% this week. Most of these declines have been among the developed market currencies like the euro and sterling. Today, the dollar sell-off has cooled slightly as US bond yields rise. The 10-year bond yield has risen to 1.626% while the 30-year yield has risen to 2.32%.
The South African rand has also risen as the number of coronavirus cases in South Africa ease. The number of daily additions has dropped to 750, which is below the 7-day moving average of 1,200. This trend could continue after the South African government allowed the Pfizer vaccine.
USD/ZAR technical forecast
The USD/ZAR pair had a bearish breakout last week. It moved below the support at 14.42, which was the previous lowest point. This week, it remains below this level of support. The downward trend is also being supported by the 25-day and 50-day moving averages (MA).
In my view, the path of least resistance for the pair is lower, with the next key level to watch being 14.00. However, a move above the now-resistance at 14.42 will invalidate this trend. It will push the pair to 15.50.