- USD/ZAR remained under some selling pressure for the fourth straight day.
- The heavily offered tone around the USD kept exerting downward pressure.
- The S&P cut SA’s rating further into junk grade but failed to lend any support.
The USD/ZAR pair dropped to 2-1/2-week lows on Thursday, though now seems to have found some support near the 18.00 round-figure mark.
The pair extended its recent sharp pullback from the vicinity of record highs set earlier this month – levels beyond the 19.00 mark – and remained under some heavy selling pressure for the fourth straight session on Thursday.
The global risk sentiment remained well supported by the fact that a number of major economies across the world have been preparing to reopen their economies and encouraging early results from a COVID-19 treatment trial.
This comes on the back of Wednesday’s awful US GDP estimates for the first quarter of 2020 and the Fed’s dovish message, showing readiness to ease monetary policy further, which led to sustained selling around the US dollar.
The upbeat market mood, coupled with a broad-based USD weakness overshadowed the pessimism over the imminent exclusion of South Africa’s government bonds from the World Government Bond Index and kept exerting bearish pressure on the USD/ZAR.
Adding to this, a jump in yields on the country’s debt seemed to have drawn a lot of attention from investors looking for higher returns. This, in turn, provided an additional boost to the ZAR and contributed to the pair’s ongoing downfall.
Meanwhile, bulls failed to gain any meaningful respite after the global rating agency S&P lowered South Africa’s sovereign credit rating further into non-investment grade, or junk, citing the impact of the coronavirus on the already struggling economy.
However, slightly oversold conditions on intraday charts might help limit further losses, at least for the time being, as market participants now look forward to the US Initial Weekly Jobless Claims for some meaningful trading opportunities.
USD/ZAR 4-hourly chart
Technical levels to watch
Share
