The USD/ZAR is around the 16.40962 ratio as of this writing with a wide spread being seen and a lot of false narratives being heard within the broad Forex market.
The USD/ZAR has returned to the lower elements of its near-term trading range as if sees plenty of action around the 16.41000 level with a wide bid and ask being highlighted. Last Friday the USD/ZAR shot up to nearly 16.58250 momentarily as the broad Forex market became volatile via U.S economic data, but also developing international news, commodity prices and a return to larger trading volumes following the holiday season – this depending on which analyst you read.
Before a day trader bites their teeth into one of the above reasons for Friday’s move, it should be noted since opening for trading yesterday the USD/ZAR has found downwards price action. The depths now being tested remain within the seemingly acceptable scale of 16.40000 to 16.45000. But technical traders will note there are plenty of outliers beyond those two ratios that have been challenged recently, meaning something might break open relatively soon and new ground will be found.
South African Rand Strength and Speculation
The USD/ZAR still looks strong via its bearish trend. After the move higher on Friday, clearly sentiment that viewed the currency pair believed it had been overbought. Today the U.S will release CPI numbers, and this inflation data will shake the market a bit. This past weekend’s public fight between Fed Chairman Jerome Powell and President Trump didn’t cause as much upheaval in Forex as some expected. Financial institutions showed that they are experienced enough not to pay attention, because quite possibly they were not surprised.
The ability of the USD/ZAR to remain within its lower realm and press against the 16.40000 mark is significant. Day traders should not get overly ambitious about downside, but on any moves higher above the 16.42000 to 16.44000 ratios, wagering on lower action may feel correct. However, there is potential international news lurking regarding the Middle East that could rattle broad market sentiment, so speculators need to pay attention to sentiment shifts.
Short-Term Thinking and Tactics
If the USD/ZAR stays around its current values going into the U.S inflation reports later today, this could set the table for more selling of the USD/ZAR. But CPI numbers would have to meet their expectations or come in lower.
- The Fed is clearly debating what will happen over the mid-term regarding interest rates and financial institutions seem to believe President Trump’s influence will create a more dovish Fed.
- However, short-term traders need seriously strong risk management skills to protect against sudden surprises that could come from afar.
- Looking for a lower USD/ZAR may be correct, but targets should remain realistic and take profit orders should be used to cash out winnings if they are accomplished.
USD/ZAR Short Term Outlook:
Current Resistance: 16.41990
Current Support: 16.40900
High Target: 16.45200
Low Target: 16.38800
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