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USD/ZAR: What Next for the Strong South African Rand?

USDZAR

The USD/ZAR pair is up slightly after mixed economic data from South Africa. It is trading at 15.03, which is slightly higher than yesterday’s low of 14.8686. Still, the South African rand is hovering at an 11-month high against the greenback. It has also risen by more than 20% against the USD since March.

In a report today, the South Africa’s bureau of statistics said that mining production dropped by 6.3% in October. That was a stronger decline than the previous month’s fall of 3.4%. It was also a reversal since production has been on a steady increase. Gold production fell by 3.9%, a sharper decline than the previous month’s 1.1%.

In another report, the South Africa’s Central Bank said that the country’s current account rose to 297 billion rand. That was higher than the expected decline of more than 36.5 billion rand. In the previous month, the account dropped by more than 123 billion. For starters, the account records the transactions between a country and the rest of the world.

USD/ZAR technical outlook

On the daily chart, we see that the USD/ZAR price has been on a strong downward trend since March. Even with the bounce today, the price is still below the short and medium-term moving averages and the descending red trendline.

It has also moved below the 78.6% Fibonacci retracement level. Therefore, I suspect that the pair will continue moving lower with the next target at 14.5, which is about 3.5% below the current price.

USD/ZAR technical chart

USD/ZAR