- USD/ZAR struggled to build on the overnight bounce from 1-1/2-week lows.
- Sliding US bond yields undermined the USD and capped any positive move.
The USD/ZAR pair lacked any firm directional bias on Tuesday and was seen oscillating in a narrow trading band, just below mid-18.00s.
A combination of factors failed to provide any meaningful impetus or assist the pair to build on the overnight modest bounce from 1-1/2-week lows and led to a subdued range-bound trading action on Tuesday.
The US dollar was seen consolidating its recent strong gains to two-week tops amid a fresh leg down in the US Treasury bond yields and speculations that the Fed might be forced to push interest rates below zero.
This comes amid the latest optimism over the re-opening of economies in some parts of the world, including South Africa, which now seemed to have convinced that the worst was already over for the SA rand.
The early uptick remained capped near 200-hour SMA, albeit the subsequent price action suggests that investors are likely to wait for a fresh catalyst before positioning for the pair’s next leg of a directional move.
Meanwhile, the pair has been trading well within a broader trading range over the past one week or so, making it prudent to wait for a sustained break in either direction in order to confirm the pair’s near-term trajectory.
Moving ahead, investors now look forward to the release of the US consumer inflation figures. This along with scheduled speeches by FOMC members might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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