The USDZAR pair is up by more than 1.3% as traders reacted to the Fed interest rate decision and the South African factory-gate inflation data. The pair is trading at 16.7665, which is slightly below the intraday high of 16.8510, which was its highest level since July 14.
The US dollar is relatively stronger today after the mild interest rate decision by the Fed yesterday. In the statement, the bank said that interest rates will remain at the current range as the outlook remains cloudy. As a result, the closely-followed US dollar index is up by about 0.10% ahead of the US GDP data. Analysts expect that the data will show that the economy declined by more than 30% in the second quarter.
The USDZAR pair is also rising because of the producer price index data released by the South African statistics bureau. The numbers showed that the PPI increased by 0.5% in June as the country continued to reopen. Analysts were expecting the PPI to rise to 0.6% and 0.8% on an annualised and quarterly basis.
The PPI data came a day after the bureau released the consumer price index data. The data showed that South Africa’s inflation rose to 2.2% from 2.1%. The core CPI rose to 3.0% from the previous 3.1%.
The USDZAR pair is trading at 16.7665. On the daily chart, the price is below the 50-day and 100-day exponential moving averages. It is also slightly above the 50% Fibonacci retracement level. This retracement connects the highest and lowest points this year. Also, the price has moved slightly above the descending trendline that is shown in purple.
Interestingly, the pair has formed a double bottom pattern that is shown in purple. Therefore, the price is likely to continue rising as the South African rand weakens. Still, bulls will need to defend the 17.000 level, which is at the intersection of the 100-day and 50-day EMAs.
On the other hand, a move below the double bottom at 16.3500 will invalidate this trend.