Rand Pulls Back Pending Next Week’s SARB Meeting

USD/ZAR ANALYSIS

  • USD/ZAR respecting Fibonacci resistance
  • Vaccine optimism gaining favor
  • Key South African economic data scheduled next week

VACCINE AFFIRMATION TO BE CONFIRMED

South Africa patiently awaits clarity on vaccine negotiations and rollout strategies. While President Cyril Ramaphosa touched on vaccine procedures and sources in his address earlier this week, concrete dates and figures are still yet to be revealed. With record levels of infections and rising death rates, vaccine arrivals cannot come sooner. The announcement that 1.5 million doses will arrive this month from India has brought some respite and positivity amongst the public and financial markets. Success of the vaccine will be the next area of discussion but for now receiving the vaccine is at the forefront for South Africans.

TECHNICAL ANALYSIS

USD/ZAR DAILY CHART

USD/ZAR daily chart

Chart prepared by Warren Venketas, IG

In my article earlier this week I mentioned the 15.4865 resistance level as a potential reversal point which has since been established after the Rand pulled back some of its lost gains. Price action suggests further support can be seen at the 15.0000 psychological level.

If a confirmed break below 15.0000 ensues, this could mark the continuation of the long-term downtrend from mid-2020. Subsequent support would then be in focus between the 61.8% Fibonacci (14.5606) and 14.5000 levels. The Relative Strength Index (RSI) indicates slowing bullish momentum which supports this bearish bias.

SOUTH AFRICAN ECONOMIC DATA IN FOCUS NEXT WEEK

Next week’s spotlight will be on the SARB interest rate decision (see calendar below). The majority consensus (17/20) is that the Reserve Bank will maintain the current 3.50% repo rate with 3/20 economists anticipating a 25bps basis cutSource: Reuters. We know that the Monetary Policy Committee (MPC) will base their decisions on data which could go against the current majority economist outlook therefore, the potential for a surprise cut should not be completely disregarded.

Retail Sales data for November has also been pushed forward to next week (previously scheduled for January 13, 2021) while December’s inflation data also features on the agenda. Inflation figures are not expected to be favorable but any positive variation may spark price swings in the Rand.

dailyfx economic calendar

Source: DailyFX Economic Calendar

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USD/ZAR: KEY POINTS TO CONSIDER MOVING FORWARD

  • 15.4865 resistance and 15.0000 support levels
  • Local vaccine rollout and cases
  • Interest rate announcement next week

— Written by Warren Venketas for DailyFX.com

Contact and follow Warren on Twitter: @WVenketas




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