ZAR: USDZAR Extends Recovery Ahead of Key Global Risk Events

Gains for USDZAR have accelerated this afternoon, with the pair trading just ahead of yesterday’s highs at typing. The below-forecast CPI data had negligible impact on price action earlier today, with headline inflation cooling to +4.6% Y/Y in July from +5.1% prior (Est: +4.8%).

• Despite its gains over the past two sessions, USDZAR remains over 4% lower compared to the early-August highs, with profit-taking dynamics potentially contributing to the recent recovery ahead of the Jackson Hole Symposium later in the week. Before that, focus for global markets is on the preliminary U.S. payrolls benchmark revisions and the FOMC minutes later in the session.
• The sell-off in USDZAR resulted in a break of key support at 17.8689, the Jun 21 low and a bear trigger. Though the pair is back above this level, the break nevertheless confirms a resumption of the downtrend that started in April and paves the way for an extension towards 17.5713, the Jul 28 ‘23 low. Firm resistance is seen at 18.2547, the 50-day EMA.