The USD/ZAR price has been in a tight range in the past few days. The pair is trading at 14.43, which is slightly above this week’s low of 14.3105. It is still about 6% below the highest level in August.
The South African rand had a relatively successful month in August. After falling against the US dollar initially, the currency rebounded as investors started to price in a strong rebound of the South African economy. Besides, the protests that happened in July ended and more businesses started reopening.
Still, the country’s economy is struggling, with the unemployment rate being at more than 34%. In fact, the total unemployment rate, including people who have given up on work, has increased to more than 40%. At the same time, consumer prices are rising, as major inputs rise.
Another main challenge is that a new variant, known as C.1.2 has emerged from the country. This variant has puzzled scientists because of its mutations are similar to that of the Delta variant. Therefore, this new wave could have a major impact on the country’s recovery.
Looking ahead, the next key catalyst for the USD/ZAR will be the American employment numbers that will come out later today. These numbers are expecredc to show that the country’s labour market remains strong. Besides, there are more than 10 million vacancies that are yet to be filled while the number of people filing for jobless claims has fallen to a post-pandemic low.
The three-hour chart shows that the USD/ZAR pair has been in a deep downward trend in the past few weeks. Along the way, the pair has moved below the 25-day and 50-day moving averages while the MACD remains below the neutral line. The pair is also slightly above the important support level at 14.22, which was the lowest level since August 14.
Therefore, the pair will likely maintain a bearish trend, with the next key level to watch being at 14.00. This is an important psychological level. On the flip side, a move above 14.80 will invalidate this view.