Because of the May Day holiday being celebrated in many parts of the world, the USD/ZAR may take on the appearance of being very quiet during a lot of today’s trading action. Traders should not get too comfortable however, because the U.S will be open for trading today and this means a sudden large order within Forex could cause a reactive spike.
And very early tomorrow all financial institutions will be reopened for full business, and deliver fast price velocity. The USD/ZAR as of this writing is near the 18.28850 ratio, but traders should monitor its results as it shifts with rather small volumes taking place for the moment.
USD/ZAR will react as Financial Institutions Position Cash for the U.S Federal Reserve Statement
Another reason not to get too relaxed while trading the USD/ZAR today, is because when full volume does return to the Forex market, financial institutions will be positioning for the U.S Federal Reserve’s FOMC Statement on Wednesday. While a quarter of a point hike has been already digested into Forex, the Fed’s rhetoric on the 3rd of May will cause volatile market conditions. The USD/ZAR which remains within the higher realms of is price range will certainly be tested and trading waters will become stormy.
Caution is recommended for the USD/ZAR Today and Risk Management will be Crucial
- Traders should not allow their positions to be held overnight – Monday into Tuesday, unless they are prepared for volatility and have stop loss orders working.
- The U.S will release ISM Manufacturing PMI data today, and this will likely cause a flurry of activity within Forex and affect the USD/ZAR when U.S investors react to the outcome.
While the USD has traded weaker against many other major currencies recently, the results in the USD/ZAR continue to demonstrate cautious behavior. Financial institutions may feel the U.S Federal Reserve will need to become more dovish eventually, but domestic economic problems in South Africa may be causing support for the USD/ZAR to be rather durable. The 18.23000 to 18.39000 range has seen plenty of trading with many outliers too also being exhibited the past handful of days.
It may be tempting for bearish traders to try and pursue downward price momentum in the USD/ZAR near-term, but they should not be overly ambitious regarding their take profit targets. Today’s trading will not have much rhyme or reason early, and should be looked at skeptically regarding results until early on Tuesday. Speculators who choose to pursue the USD/ZAR today and wager should understand that they are essentially traversing within a thinly traded market which could produce sudden surprises and whipsaw values until full volumes return.
USD/ZAR Short Term Outlook:
Current Resistance: 18.32400
Current Support: 18.27200
High Target: 18.37910
Low Target: 18.23900
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