BUZZ-COMMENT-South African rand's recovery is stalling badly

Feb 11 (Reuters) - A steady three-day decline for USD/ZAR in early February and bearish candlestick signals boded well for the rand. However, as external influences joined forces with domestic uncertainty, the outlook for the rand has dimmed.

The immediate focus is on South Africa's fragile steel industry and the country's budget, due for release next week. The U.S. administration has placed 25% tariffs on steel imports and South Africa's steel industry is already struggling in the face of cheaper imports.

Weak growth and increased spending leaned heavily on state finances last year and fiscal slippage is likely to continue through 2025. Improved growth this year and next could ease the revenue side of the equation but spending pressures are likely to remain. Growth concerns, increased expenditure and a budget deficit will feed through to investor sentiment and weigh on the rand.

USD/ZAR's fall from the February 3 19.05 high has stalled at the top of the daily Ichimoku cloud, 18.4695. Doji style candlesticks and a rising cloud point to rand weakness.

Monday's 18.6500 failure high provides resistance and some hope for the ZAR, but USD/ZAR is gaining traction, and uncertainty ahead of the budget plus concerns over President Donald Trump's position on South Africa could underpin a dollar recovery through the second half of February.

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