The USDZAR is down slightly as the South African rand rises to the highest level since March. The pair is trading at 15.8313, which is below the important support of 16.00.
The South African rand rally accelerated yesterday when data from Standard bank showed that business activity continued to do well in October. The PMI came in at 51, which is the highest it has been since June 2016 as companies reopened.
In the statement, the bank cited higher internal and external demand for the rise. It also pointed to the fact that the number of Covid-19 cases has been in a steep downward trend recently.
The USDZAR price also declined as traders reacted to the outcome of the United States election and the overall weaker dollar. Indeed, the dollar index is down by more than 0.25% today as traders’ price-in a Joe Biden victory.
As a result, the dollar is falling because the risk aspect has been removed with the conclusion of the election. They also expect that Biden will be more willing to spend and load-on debt, which is usually negative for the greenbuck.
However, the risk for this argument is that Biden will require the senate, which is expected to remain in the control of Republicans.
The USDZAR is also falling ahead of key events in the economic calendar. Later today, the Fed will deliver its rate decision followed by the nonfarm payroll numbers tomorrow.
USDZAR technical outlook
On the daily chart, we see that the USD/ZAR has been in a steep downward trend since April, when it reached a high of 19.3186. Today, it reached a low of 15.8313, the lowest level since March 10. The price is below the 25-day and 15-day exponential moving averages.
It has also moved below the 50% Fibonacci retracement, which is evidence that bulls are relatively strong. Therefore, I suspect that the trend will continue as bears target the next support at 15.50. The stop for this trade is at 16.50.
USD/ZAR technical chart