ZAR gains as political uncertainty eases

South African rand is making strong gains against major currencies like USD, EUR or JPY today. USDZAR drops around 1% on the day, following a post on X platform by Fikile Mbalula, secretary-general of African National Congress (ANC). Mbalula said that deal on Government of National Unity (GNU) is close. ANC and Democratic Alliance (DA) emerged as the two largest South African parties in the latest elections and attempts have been made since by leaders of these parties as well as President Ramaphosa to form a national unity government, that will include members of all 10 parties, which won parliamentary seats in the elections.

Formation of the Cabinet has been delayed by negotiations between involved parties, but latest news coming from the country suggest that agreement may be reached and announced soon. This, in turn, will allow for economic reforms that will help with country's issues, like the energy crisis.

Taking a look at USDZAR chart at D1 interval, we can see that pair attempted to break above the 18.50 resistance zone yesterday and today, but both of these attempts failed, and the pair pulled back below 50-session moving average (green line). A near-term support zone to watch can be found in the 18.00 area and is marked with a number of previous price reactions.

Source: xStation5