The USD/ZAR pair is firmly in the red ahead of the Federal Reserve interest rate decision. It is trading at 14.8390, which is 23% below its year-to-date high. And analysts at Unicredit believe that the South African rand could rise to as high as 14.67.
What is happening? The Fed is the only game in town today in the foreign exchange market. The bank will deliver its final interest rate decision of the year later today. While the bank will likely not change its current interest rate, it will provide hints about what it will do in the coming year.
A highly dovish Fed will possibly push the USD/ZAR further in the red. On the other hand, if the bank turns hawkish, it could send the pair higher as investors flock back to the dollar.
What next for the USD/ZAR: In a note earlier today, analysts at Unicredit said that the pair could continue falling with the next target being at 14.73 followed by the next support at 14.67. They wrote; “we remain prudent about a further ZAR rise towards the next key levels on charts between 14.73 and 14.67.”
USD/ZAR technical outlook
On the daily chart, we see that the South African rand has been in a strong rally. This decline is supported by the short and longer moving averages. Similarly, the relative strength index has been in a downward trend. Therefore, the USDZAR pair will continue to fall as bears aim for the Unicredit’s target of 14.67 and 14.50.