On Thursday and Friday of last week the USD/ZAR traded within sight of the 16.69000 ratio, this after the U.S CPI showed inflation is weakening. However, later on Friday the USD/ZAR started to reverse higher and challenged the 16.92000 vicinity. The USD/ZAR then moved lower going into the weekend finishing near the 16.78000 level.
U.S Data Influences the USD/ZAR but so does Unease in South Africa
The U.S inflation data helped fuel weakness in the USD which was mirrored in the broad forex market in most major currencies, and the USD/ZAR reflected this outcome. However, this morning the USD/ZAR instead of sustaining its lower momentum suddenly experienced an abrupt movement upwards and thus far early Monday it has been maintained. The USD/ZAR is trading near 17.04000 as of this writing and price action has been quick.
‘Helping’ the USD/ZAR likely rise in value early today is considered by financial houses that the South African Rand still faces complex challenges. While it may seem farfetched to some readers to take into consideration the number of electrical supply issues South Africa is struggling with, those who live in the nation know firsthand that load-shedding is causing economic hardship for businesses and citizens. Unfortunately, the magnitude of the load-shedding power outages has increased and this is causing worries about unrest in the nation.
Support Proved Strong for the USD/ZAR near 16.77000 and is interesting technically
The upwards momentum of the USD/ZAR may seem like a natural reaction to some who believe the currency pair had been oversold and is trading in a natural cyclical manner. Bearish traders may believe that higher ratios in the USD/ZAR may prove good spots to sell the Forex pair and seek support levels again, and they may be proven correct. But the more optimistic view of the U.S. Federal Reserve potentially staying less aggressive and the notion South Africa continues to have internal problems that will cause problematic economic issues could make the USD/ZAR volatile over the next few months.
- If the USD/ZAR sustains value over the 17.00000 level in the short term, this could mean additional bullish behavioral sentiment will continue to test the currency pair with buying positions.
- Resistance near the 17.08000 to 17.10000 ratios should be watched, it these levels hold it could be a place speculative sellers may try to ignite short positions.
The USD/ZAR is likely to remain quite volatile this week as traders deal with the complex wagering landscape within the currency pair that may continue to produce a rather wide price range. Traders should practice solid risk management and perhaps look for quick-hitting trades with narrow targets.
USD/ZAR Short-Term Outlook:
Current Resistance: 17.08100
Current Support: 16.94500
High Target: 17.22300
Low Target: 16.83400
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