The USDZAR pair slumped recently despite a rally in the dollar index from lows not seen since 2018. An upbeat economic assessment from the Federal Reserve and a failure to clarify any further stimulus, whether from the central bank, or the federal government, saw a bounce in the dollar against global currencies.
The Rand was stubborn after the central bank held rates steady, but inflation bounced one percentage point higher from 2.2% to 3.2%. Markets had expected the country to slip into deflationary territory after strict lockdowns and the subsequent economic damage. The Rand is now slipping after a rise in cases has given rise to the chance of s second spike in the country, which was the worst-affected in Africa.
Today sees the release of U.S. jobless claims figures with the market expecting a drop in both the initial claims and the continuing claims. Initial claims have fallen from 1 million to 860k and the market expects a modest drop to 860k. An improvement in this number could see strength in the dollar again.
The dolar also sees headline risk from a collection of economic officials today. Fed Chair Jerome Powell continues his testimony to the U.S. Chamber of Commerce, while we also have speeches from Governors Evans and Williams, with a speech also due from Treasury Secretary Steven Mnuchin. Powell and Mnuchin have both stressed the need for further stimulus measures and any statement regarding this could spur a dollar rally.
The USDZAR pair slumped from resistance at 17.60 to test the lows at 16.40 and the strong rally above is a potential triple bottom. A close near the 16.40 level would negate the upside potential but the upside is favoured for a break above 17.60 seeing the previous highs at 19.00 as a target. The Investing Cube Trading Course can help traders to identify technical analysis entry and exit points.
