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USDZAR: South African Rand is About to Shoot to a Feb High of 15.0


The USDZAR price is trading at the lowest level since March this year as the flight from the safety of the greenback intensifies. The pair is trading at 15.2230 while the US dollar index is down by 0.12% today.

The biggest news today will be the South African inflation data that will come out in the morning session. Economists expect the data to show that the headline CPI increased by an annualised rate of 3.1% in October. That will be a better performance than September’s increase of 3.0%. The core CPI, which exclude the volatile food and energy products, is expected to remain unchanged at 3.3%.

The USDZAR is also reacting to fiscal news from South Africa, where the government plans to sell shares in South African Airline. In a statement, Tito Mboweni, the finance minister, said that the government plans to sell its stake to the public, an operational partner, and the country’s pension firms. The government has allocated more than $685 million to save the company whose planes are idling in South Africa.

These reports come a few days after Fitch and Moody slashed South Africa’s credit rating deeper to junk. S&P Global did not cut but its rating is still in the junk status.

USDZAR technical outlook

Turning to the daily chart, we see that the USDZAR price has been in a strong downward trend since April this year. The pair has fallen by more than 20%, making the South African rand among the best-performing currencies. Today, the rand remains below the descending trendline that is shown in red. It is also slightly above the important psychological level of 15.00.

Therefore, in the near term, I expect the pair to continue falling, with the next stop being at 15.00. On the other hand, a move above the resistance at 15.70 will invalidate this trend.

USDZAR technical chart