South Africa continues to come under scrutiny as high levels of corruption, lack of responsibility and mismanagement of funds have abandoned the emerging market in an already dire state. Preceding that the Coronavirus pandemic, the nation was already sitting with high levels of unemployment that has now been exacerbated by strict lockdown measures which have crippled a high number of businesses, resulting in further pressure on the authorities to reduce the budget deficit and lower the rate of debt accumulation.
Having a large portion of South African citizens emigrating overseas, the execution of new tax laws surrounding private Retirement Annuities and Provident Funds have further weighed on investor sentiment since the nation's lagged vaccine rollout combined with political and economic uncertainty may jeopardize additional development for the emerging market (EM) currency.
USD/ZAR PRICE ACTION
Together with the US Dollar facing its own challenges, USD/ZAR continues to trade within a zone of confluency involving the key Fibonacci Retracement levels, supplying support and resistance for the currency set. The declining trendline continues to provide a wall of resistance in the emotional level of 15.35 with the Moving Average Convergence/Divergence (MACD) stays above the zero line while rests in the 50 Day Moving Average in the psychological level of 15.00.
For the time being, the 14.4% Fibonacci Retracement level provides support in the emotional level of 15.00. A break below this level can see a retest of January lows at 14.50. But, if purchasing pressure is strong enough to surpass current immunity of 15.297, the 23.6% retracement level, subsequently bulls may induce price action toward the next level of resistance at 15.50
GBP/ZAR PRICE ACTION
GBP/ZAR proceeds to bounce between the 50 and 61.8% Fibonacci retracement level. Struggling to break below the 50-Day Moving Average resulted in an influx of buyers, pushing prices back to the psychological level of 21.00. Meanwhile, the cost action remains in favor of the bulls, using the trendline and MACD suggesting that the uptrend remains, at least for today.
