USD/ZAR Price Analysis: Advances to 1-week tops, beyond 18.50 level
|- USD/ZAR recovers further from two-week low and gains traction for the fourth straight session.
- Fading hopes for a quick economic recovery weighed on emerging currencies, including SA rand.
- The USD remained well supported after Powell dismissed the idea of negative US interest rates.
The USD/ZAR pair edged higher for the fourth consecutive session on Thursday and climbed beyond mid-18.00s, hitting one-week tops in the last hour.
The pair built on this week's modest recovery from near two-week lows and was being supported by a combination of factor. Growing fears about the second wave of coronavirus infections and fading hopes for a quick global economic recovery dampened demand for emerging market currencies, including the South African rand.
Meanwhile, South African President Cyril Ramaphosa on Wednesday announced that the country would move to a phase-three lockdown and further ease restrictions on the economic activity by the end of the month. The development, however, did little to lend any support to the domestic currency or prompt any fresh selling around the USD/ZAR pair.
On the other hand, the US dollar remained well supported by the fact that the Fed Chair Jerome Powell, in a closely watched speech, rejected the idea of pushing interest rates to sub-zero levels. This coupled with a softer risk sentiment helped revive the US dollar demand and further contributed to the pair's modest uptick on Thursday.
It will now be interesting to see if the USD/ZAR pair is able to capitalize on the move or once again meets with some fresh supply near the top end of a near three-week-old trading range. The mentioned barrier is placed near the 18.75-80 region, which should act as a key pivotal point for short-term traders.
Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.
Technical levels to watch
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