USD/ZAR is on a rebound after the recorded rise in South African unemployment numbers. According to the national statistics agency, the country’s unemployment rate was at 32.60% in Q1’21 compared to 32.50% in Q4’20. During the first three months of 2021, there were 7.200 million unemployed people in South Africa. The figure is similar to 2020’s last quarter, but higher than 7.100 million in Q1’20. Notably, the country’s unemployment rate is at a new record high.
As a reaction to the released job data, Intellidex’s head of capital markets research, Peter Montalto stated,
“unemployment is unlikely to return to pre-crisis levels given we don’t see real per capita output returning to pre-crisis levels. The economy would need to see trend growth well above 2.5% rather than the 1.7% we see to absorb the lost jobs.”
Notably, unemployment rate in South Africa has remained above 20% for over two decades. However, the coronavirus pandemic made it worse as some businesses had to reduce their workforce or close shop in totality. In April, the government ended the relief grant program for unemployed people.
USD/ZAR will also be reacting to the US ISM manufacturing PMI. Analysts expect a reading of 60.9, which is higher than April’s 60.7. A better-than-expected figure will be a bullish catalyst for the currency pair.
USD/ZAR technical outlook
USD/ZAR is trading higher by 0.3% at 13.7779. Earlier in the day, it hit an intraday low of 13.6840. Nonetheless, the currency pair remains on a downtrend. Since the beginning of the year’s second quarter, it has dropped by about 5.29%. On a 4-hour chart, it is trading below the 25 and 50-day exponential moving averages. This is a sign that it may remain on the downtrend in the near term. Notably, it is finding some resistance along the 25-day EMA.
I expect USD/ZAR to rebound further to 13.8446, which is along the 50-day EMA. At that level, the pair may experience some resistance. Subsequently, it will find support at 13.7740 or lower at 13.6840.