As October trading for the USD/ZAR begins, the previous handful of weeks have shown the currency pair reacting to global behavioral sentiment in a correlated manner.
The USD/ZAR as of this writing is moving upwards after touching lows last week near the 18.69500 ratio a few times. The USD/ZAR was able to trade in a correlated manner with the broad Forex market and is continuing to react to the ‘winds’ being created via nervous behavioral sentiment in the global trading landscape. The upwards momentum in the USD/ZAR which has seen a solid dose of price velocity following a long holiday weekend in South Africa has brought the currency pair to a value of nearly 18.90000.
As the month of September comes to a close and October begins, speculators within the USD/ZAR should brace for the impact of potential reactions caused by more nervous sentiment being generated in the broad financial markets. The 19.00000 remains within shouting distance for the USD/ZAR and it will certainly become a target if nervous trading persists. A penetration of 19.00000 and sustained momentum above could develop if U.S equity markets remain weak in October.
Risk adverse sentiment has turned poor and seems to be lingering as U.S Treasury yields remain high because the U.S Federal Reserve seems intent on hiking its Federal Funds Rate in November, energy costs have become expensive again, and fears of a credit crunch occurring in the U.S for consumers is making financial institutions cautious too. The USD/ZAR reacts like all other major currency pairs to the impact from U.S market dynamics.
USD/ZAR Highs and Resistance Levels to Consider
The USD/ZAR hit a high of nearly 19.33950 on the 6th of September and then the currency pair was able to generate some selling until the 14th when a ratio of 18.75875 was touched and sparked a reversal upwards. Trading since the middle of September has become more volatile with reversals being demonstrated, but a rather strong amount of nervous buying being generated which has created the perception of upwards momentum. The 18.70000 mark has become a rather solid level the past couple of weeks acting as support.
Forex became increasing nervous once again last week, this as the U.S Federal Reserve repeated their aggressive rhetoric regarding the potential of higher interest rates. The USD/ZAR reacted with volatility and rather intriguing tests of its higher range. However, technically it appears the 18.80000 has become a rather strong inflection point. Yesterday’s and today’s trading have shown upwards traction again, and it if it maintained in the near-term and global financial markets remain nervous there is reason to suspect resistance levels above will start to get tested.
- The higher values of the USD/ZAR may feel overbought to speculators, but if trading hits the 19.00000 and the 19.10000 levels and become sustained, a repeat of highs seen in early September would not be a surprise.
- After reaching high water marks near the 19.20000 to 19.300000 the USD/ZAR has been able to produce reversals lower.
- Speculators may be tempted to sell the currency pair if these higher prices are touched, but global sentiment must be monitored.
- Risk adverse trading remains fragile and if nervousness builds, financial institutions may embrace the USD as a safe haven currency, which could cause a test of higher resistance levels.
USD/ZAR Outlook for October 2023:
Speculative price range for USD/ZAR is 18.55000 to 19.35000
Risk sentiment remains a critical issue in Forex and for the USD/ZAR. South Africa economic conditions remain highly questionable too, but the currency pair has correlated to the broad Forex market based on global conditions and not South Africa domestic concerns. However, the problems within South Africa regarding economic policy, infrastructure concerns and political transparency serve as support for the USD/ZAR in many respects.
Thus, if the USD/ZAR does generate selling, support levels near the 18.80000 to 18.70000 should be monitored. A move below the 18.70000 that is sustained would be interesting and welcome in South Africa, but financial institutions may view lower USD/ZAR values as a chance to look for reversals upwards. Speculators who want to pursue higher values in the USD/ZAR cannot be blamed, but cautious traders may want to use slight selloffs as a place to look for reversals upwards. If global market sentiment remains nervous, there is reason to suspect the upper realms of the USD/ZAR seen over the mid-term can be tested again.
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