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The USD to ZAR (USDZAR) pair is down for the second straight day as the South African rand continued to strengthen against the greenback. The currency has also strengthened against the pound and the euro. South Africa reports better economic data The USDZAR is rising as investors react to the upbeat economic data from South Africa. A report released yesterday by Markit in collaboration with Standard Bank showed that the South African manufacturing PMI rose to 53.9 om May as the country started to reopen its economy. This was among the highest PMI number released yesterday. For example, the US manufacturing PMI released by ISM was at 52.1. Therefore, this data implied that the South African economy was coming back to life after being in a lockdown. The PMI was not the only positive number from the country. For example, data from the statistics bureau showed that the total vehicles sold in the country declined by more than 30.70%. This was negative number but it was better than the 68% decline in the previous month. In total, the country sold more than 31,000 new cars in June. And today, a report showed that the country’s current account rose to 68.7 billion rand in the first quarter. That was better than the decline of more than 34 billion that analysts were expecting. US nonfarm payrolls data The USDZAR pair has also declined because of the overall underperformance of the US dollar. The US dollar index, which measures the performance of the USD against a basket of currencies has declined by more than 0.30%. That is because traders are waiting for the much-anticipated nonfarm payroll numbers. Analysts expect that the economy created more than 3 million new jobs in June and that the unemployment rate declined to about 12.5%. Therefore, because of the importance of these numbers, I expect that the USD to ZAR (USDZAR) pair will be relatively volatile in the afternoon session. Risks for the USDZAR pair The South African rand has been gaining but there are several risks for the South African economy. The biggest risk is that the number of coronavirus cases in the country is rising. Yesterday, the health ministry reported more than 8,000 cases. This is risky because it increases the likelihood of more lockdowns. Second, there is a risk about the South African fiscal situation. In a statement yesterday, the IMF said that talks were occurring at a measured pace, which means that little progress has been made. Also, data from the Central Bank showed that the economy probably contracted by more than 31% in the second quarter. That was the third consecutive quarter in the red. USDZAR technical analysis The USDZAR pair is trading at 16.9115, which is lower than last week’s high of 17.5300. On the daily chart, the price has just moved below the 100-day exponential moving averages. It is also below the 50-day EMA. The price is also approaching the 50% Fibonacci retracement level while the RSI has moved slightly lower. It has also formed a downward arc as shown below. This means that the price may continue falling as bears target the next support at 16.6317, which is the 50% retracement. On the flip side, this price will be invalidated if the price moves above this week’s high of 17.5337. USDZAR technical forecast