The USD/ZAR exchange rate has been in a solid bullish trend as the dollar strength continues. The closely-watched US dollar index has surged to over $105, mostly due to the actions by the Federal Reserve to combat inflation.
In a statement, Jerome Powell said that the bank would continue with its hawkish tone. He also said that the Fed was taking in more recession risks as monetary conditions worsened. Therefore, analysts expect another 0.50% or 0.75% rate hike by the Fed in July.
The USD/ZAR has also jumped because of the falling consumer and business confidence worldwide. With the fear and greed index falling, many people and businesses have rushed to the safety of the US dollar. The greenback is often seen as the currency of the last resort when conditions worsen.
Further, investors are weighing the hawkish tone of the South Africa Reserve Bank (SARB) compared to that of the Federal Reserve. SARB has delivered several rate hikes this year to fight inflation. However, recent data showed that the country’s inflation surged to over 6% in May as energy costs remained elevated.
USD/ZAR Long (Buy) Enter at: 16.371929 T.P_1: 17.156668 T.P_2: 18.009122 S.L: 15.644744
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