USD/ZAR looks to extend correction from all-time-highs further to 19.10 ahead of FOMC minutes

The USD/ZAR pair is struggling in holding its auction above the immediate support of 19.15 in the Asian session. The asset is expected to deliver more downside as the upside for the US Dollar Index (DXY) seems barricaded due to an absence of development in US debt-ceiling issues.

Decent gains have been generated in the Asian session by the S&P500 futures but are insufficient to cheer the overall market mood. US equities witnessed a sheer sell-off on Tuesday, weighed heavily by selling pressure on technology stocks. Investors are worried that a default by the United States economy due to a delay in US debt-ceiling raise would result in a loss of millions of jobs in the domestic economy and a ripple effect on global markets.

The US Dollar Index (DXY) has shifted below the crucial support of 103.50 ahead of the Federal Open Market Committee (FOMC) minutes. The street is eyeing cues about interest rate guidance. However, dovish commentary delivered by Federal Reserve (Fed) chair Jerome Powell last week is advocating no further interest rate hikes in June.

US firms are already facing issues in availing credit fur to tight conditions on disbursal by US regional banks. This would allow tight labor market conditions to lose some heat, which will have a negative impact on stubborn inflation as retail demand will get impacted significantly.

This week, USD/ZAR retreated firmly after posting all-time high at 19.52. The South African Rand remained in a weak spot due to deepening tensions between South Africa and the US. US ambassador accused South Africa of supplying arms to Russia. In response to that South African Finance Minister Godongwana claimed that the diplomatic row has been resolved, and it is unlikely to result in the US imposing penalties such as sanctions.”