USD/ZAR forecast:  South African rand rally confronts key risk

The South African rand continued its uptrend against the United States this year. The USD/ZAR exchange rate was trading at 16.45 on Monday, down by 17.50% from its highest point in 2025. So, will the rand rally continue as a fresh risk emerges?

South Africa could attract more Trump ire

The ongoing South African rand rally could be at risk as a new risk emerges. The risk is the ongoing military exercises in its waters involving countries like Iran, Russia, and Chinese warships. 

South Africa notes that the exercises are meant to promote maritime safety, trade, and interoperability. However, most analysts believe that Donald Trump will see these exercises as a form of provocation. 

These exercises come at a time when Trump’s relations with South Africa have worsened. He has accused the government of taking land from the Afrikaner community and killing them in their thousands. There is no evidence to prove that.

Trump has responded by announcing a 30% tariff on goods coming from South Africa. However, there are signs that the country has weathered this storm as its exports to the US rose by 37% last year. The US accounts for 7.2% of South Africa’s exports. 

Trump may respond to the new military activity by raising the tariff rate. Alternatively, he may announce sanctions against South Africa for its coziness with its enemies like China and Iran. South Africa is an original member of BRICS, an organization that Trump loathes.

South Africa's economy is doing well

Another sign that Trump’s tariffs had a minimal impact on South Africa’s economy is the fact that the economy was doing well. Data shows that the country’s inflation has stabilized to 3.5%, inside the original target range of the South African Reserve Bank (SARB).

More data shows that the economy grew by about 1.2% in 2025, a modest recovery after the previous weakness. This growth will likely continue in the coming years now that the government has largely handled the power crisis. Load shedding by Eskom has almost ended.

Meanwhile, S&P Global Ratings has upgraded the country’s credit rating from stable to positive and reaffirmed at BB-/B. Other agencies by Moody’s and Fitch will upgrade the economy this quarter.

The South African Central Bank slashed interest rates from 7% to 6.75%, and has hinted that it will continue cutting them in the near term. At the same time, the Federal Reserve delivered three interest rate cuts, and analysts expect more cuts this year as the labor market softens.

USD/ZAR technical analysis 

USDZAR technical chart | Source: TradingView 

The weekly chart shows that the USDZAR exchange rate has been in a strong downward trend in the past few months, moving from a high of 19.93 in April last year to the current 16.43.

It has moved below the 50% Fibonacci Retracement level at 16.65 and the important support level at 17.025, its lowest level on October 7 last year. This level was the neckline of the double-top pattern.

The pair has formed a death cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) have crossed each other. Also, the Average Directional Index (ADX) has jumped to 19, its highest level since April last year, a sign the bears are control.

Therefore, the most likely scenario is where the pair continues falling as sellers target the psychological level at 15.67, the 61.8% Fibonacci Retracement level. On the other hand, a move above the resistance at 17.02 will invalidate the bearish outlook.