The USD/ZAR price has been declining in the last few weeks as investors focus on Ukrainian concerns. The pair is trading at 15.11, about 7.7% lower than its highest in December 2021.

South African inflation data

The USD/ZAR dropped just before the forthcoming South African consumer price index (CPI) data scheduled for Wednesday.

According to economists polled by Reuters predict an eased inflation slightly in January regardless of surging energy prices.

Analysts polled by Reuters predict a CPI decline from 0.6% in December to 0.2% in January. They forecast an inflation decline from 5.9% to 5.7% in January on a year-on-year basis.

Meanwhile, a drop in the Core CPI is expected from 0.3% to 0.2%, excluding volatile food and energy prices. They expect a rise to 3.5% on a YoY basis.

This data indicates that South Africa has less inflation than the US. A slight decline indicates that the Central Bank’s (SARB) policies are working.

Like emerging market central banks, SARB has also implemented a more hawkish tone and hiked rates.

The USD/ZAR pair has also retreated as Omicron’s fears fade. Covid cases in SouthAfrica have reduced the past few days. Thus public activities have been normalized in most areas.

The US retail sales data will also be an impetus to the pair. Economies expect to see a rise in January retail sales after dropping in December. South Africa is also publishing their retail sales data.

USD/ZAR forecast

The four-hour chart shows that the USD/ZAR pair has been in a strong bearish trend in the past few weeks. It has fallen by about 7.7% from the highest point in December. 

The four-hour chart indicates a strong bearish USD/ZAR in the past few weeks. It fell by about 7.7% from its highest in December. It moved beneath the 25-day and 50-day moving averages. It has also moved below the descending pattern in blue while the Stochastic Oscillator has declined.

Therefore, there is a possibility that the pair will continue dropping before and after the retail sales data. If this happens, the next critical support to watch will be at 14.98

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