The USD/ZAR has mirrored the results of many major Forex pairs and displayed some downward momentum since the 8th of September.
The USD/ZAR is trading near important short term lows as of this writing, with the 17.0000 level within sight. However the current price of the USD/ZAR is still closer to 17.08000 at this moment with fast conditions sparking the interest of speculators. A high of nearly 17.54500 was seen only a handful of days ago on the 8th of September. The movement downwards in the USD/ZAR has mirrored other major currencies pairs.
The Allure of Support Potentially being Weak may turn into a Trap
The last time the USD/ZAR traded below the 17.0000 juncture was on the last day of August. This doesn’t mean it won’t happen again, but it does exhibit the rather strong trend upwards the USD/ZAR has displayed. The sudden spurt of selling in the USD/ZAR is intriguing, and certainly the potential to move lower exists. However, traders should keep in mind the long term trend for the USD/ZAR has been bullish.
Short term speculators likely have an advantage as they choose their positions without the thought of what has occurred since April of this year. A real game of cat and mouse may be developing in which traders decide to flirt with selling positions because they believe the 17.00000 level will prove vulnerable. However, traders should keep in mind the potential of strong reversals upwards still lurks and has been seen the past few months of price action in the USD/ZAR.
Short Term Support Needs to be watched for Vulnerability and Price Action
- If current short term support near the 17.04000 to 17.02000 levels holds back the downward trajectory recently highlighted, buyers could be tempted to step in and wager on upside action.
- Choppy conditions are likely to occur in the near term as speculators react to global behavioral sentiment which remains nervous.
The U.S Federal Reserve will certainly hike its interest rate again next week and this thought has already been ‘baked’ into the value of the USD/ZAR. The question traders need to worry about is what the U.S central bank will proclaim as its outlook on higher borrowing costs. The threat of more interest rate hikes from the U.S Fed may keep the USD/ZAR within its higher price range near term.
Speculators’ who believe the USD/ZAR has been oversold in the short term, may be tempted to wager on upside reversals being demonstrated. Selling has been seen and important support is in sight, but if proven durable, the USD/ZAR may able to revisit the 17.10000 level without much trouble in the near term. Risk management will be essential within the current trading environment.
USD/ZAR Short Term Outlook:
Current Resistance: 17.12900
Current Support: 17.06100
High Target: 17.21000
Low Target: 17.01800
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