After touching highs around 19.63080 on Thursday and Friday of last week, the USD/ZAR has come off the upper values and is trading near 19.39500 as of this writing. The apex prices seen late last week touched prices in the USD/ZAR not seen since early June. In May of this year the USD/ZAR touched a high of nearly 19.91650.
Correlated USD/ZAR Moves with Broad Forex Market
The broad forex market remains nervous, and the USD has been strong. However, this morning’s reversal lower, though slight, shows financial institutions remain suspicious the USD has been overbought. Last Friday’s U.S jobs numbers showed hiring was strong, but interestingly the Average Hourly Earnings number came in below expectations. While the USD certainly got stronger, the financial markets showed reactionary turbulence. The USD/ZAR is trading near important highs, but some speculators may be tempted to try and sell the currency pair at perceived resistance.
USD/ZAR is Highly Priced and may Traverse a Choppy Range
The short and near-term may produce a rather choppy price range for the USD/ZAR. U.S. banks are closed today, which will limit the amount of volume in Forex, so traders should be ready for some additional volatility tomorrow. The USD/ZAR should be watched within its current support and resistance levels short term. Highs around 19.40000 to 19.50000 may appeal to some traders as a place to ignite short positions. However, it should be remembered the USD/ZAR surpassed these highs last week and in May and June.
- Key inflation data will come from the U.S. this Wednesday and Thursday and affect the USD/ZAR.
- The Federal Reserve’s FOMC Meeting Minutes will be published this Wednesday, and it will offer insights that financial institutions will react upon.
While most analysts believe the U.S. Fed will raise interest rates in November, there is reason to suspect the coming expected hike may be the last one from the central bank. However, short-term traders need to react to current market behavior and not what the mid-term outlook is for the USD/ZAR. Traders should be prepared for the potential of whipsaw movements over the next two days as financial institutions try to find equilibrium within the broad markets via U.S Treasuries and equities.
USD/ZAR Short Term Outlook:
Current Resistance: 19.46010
Current Support: 19.33190
High Target: 19.56300
Low Target: 19.25100
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