The USD/ZAR price continued rising even after the relative strong consumer inflation data.
Buy the USD/ZAR and set a take-profit at 19.00.Add a stop-loss at 18.10.Timeline: 2 days.
Set a sell-stop at 18.19 and a take-profit at 17.50.Add a stop-loss at 18.70.
The USD/ZAR price has been in a strong bullish trend this year as the US dollar index continued surging amid an extremely hawkish Federal Reserve. It rose to a high of 18.56, which was the highest level since 2020. The pair has risen by more than 25% in the past 12 months. The South African rand has fallen by more than 57% from the lowest level in February 2018.
South African rand crash
The USD/ZAR price continued rising even after the relative strong consumer inflation data. According to the South African statistics agency, the headline consumer inflation rose to 7.5% in September. Core inflation, which excludes the volatile food and energy prices, rose from 4.4% in August to 4.7% in September.
The increase was better than the median estimate of 4.5%. Therefore, analysts expect that the South African central bank will continue hiking interest rates in the coming months. The bank hiked interest rates by 0.75% in September.
Still, there are concerns that the South African economy will continue struggling in the coming months. A major concern is energy, where power outages have continued in the past few months. Its unemployment rate has continued rising in the past few months. The latest data showed that the rate rose to 33.9%.
The USD/ZAR price has risen because of the ongoing Fed tightening. With America’s inflation rising, analysts expect that the Federal Reserve will continue hiking interest rates in the coming months. It has risen by 300 basis points this year and analysts expect that it will continue doing so in the coming days.
The next key catalyst for the pair will be the upcoming US existing home sales data. These numbers will come a day after the housing and building permits data. Housing starts dropped below 8.1% while building permits rose by 1.4%.
The USD/ZAR price has been in a strong bullish trend in the past few months. It has moved above the ascending trendline shown in blue that connects the lowest levels since August. The pair moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has risen.
Therefore, the pair will likely continue rising as buyers target the next key resistance level at 19. A move below the support at 18.16 will invalidate the bullish view.