USDZAR breaks R18.00 support. USD loses footing against the ZAR.

After reaching a record high of R18... Last month, the future of the ZAR seemed in peril as the South African government struggled with load-shedding, However the rand has found new strength as the latest US FED interest hikes increase has weakened the US dollar and just yesterday we broke past the R18 level. What should USDZAR traders expect for the foreseeable future？

Depending on your location and your broker, the USDZAR may be listed as an exotic pair hence they will charge you high spreads. This is not true of all brokers though as some offer lower spreads on this pair. If you are interested in finding such brokers I recommend you look through WikiFx. This App has a service that compares the spreads that different brokers offer on a pair hence you will be able to find the right broker for your trading needs.

What has been the recent Economic situation in South Africa？

The amount of load shedding that has been affecting South Africa recently has risen to unprecedented levels. This has placed a lot of uncertainty on the South African economy as businesses have struggled to retain productivity levels with inconsistent electricity supply. This along with the political instability caused by the recent country-wide shutdown by the EFF (one of the opposition political parties) has placed the country in a precarious position that has caused doubts in the market. At the height of the market fears the rand had risen to R18.60 and at the time it looked like it was still yet to rise, however then came the FED interest hikes decision.

The decision to increase interest rates by the FED was already expected as Powell (the Federal Reserve chair) had already promised higher interest rates in the near foreseeable future in his recent testimony to the US Congress. As the interest rates were hiked as expected the market reacted by moving further away from the dollar to other stable instruments such as gold, hence why we have seen the value of the USD drop and the value of other assets like gold and Bitcoin rise. This has titled the USDZAR in the other direction causing the USDZAR to lose to the bears and come crushing past that R18 level.

What should USDZAR traders expect？

We should not break past that R18 resistance for a while hence if the market reaches that Resistance we should look to sell the pair. Next week is the first week of April, which means there will be several back-to-back USD economic events that are planned out for the week so there is bound to be volatility in the market. We are likely to retest that R18 resistance so be ready for it.