Just when speculative appeal of the USD/ZAR was growing for day traders as the currency pair touched lows near the 18.23500 vicinity last Monday, a wave of buying started to take place. Yes, U.S financial institutions were on holiday Thursday and Friday of last week which drastically lowered trading volumes. However, the rise in the USD/ZAR has to also be regarded with concern because domestic issues in South Africa continue to cause worries in the financial sector among its trading partners.
Memories of the Rugby World Cup victory are fading into the South Africa landscape. Problems once again with loadshedding are becoming news. Stage 6 level blackouts occurred this weekend in the nation and there seem to be signs that electrical supply is going to remain a big issue ahead. This cuts into the nation’s business production. There are also massive problems at South Africa’s ports, off-loading of container ships has become extremely slow and this is causing problems for importers and exporters.
Short-Term USD/ZAR Speculation Should be Careful
As of this writing the USD/ZAR is near the 18.75700 level with fast results flourishing. Traders need to examine the price of the USD/ZAR as they read this article to get a feel for market action which has followed. Intriguingly a high for the USD/ZAR occurred on Friday near the 18.96000 vicinity. This higher price level had last been seen in late October. The notion the USD/ZAR could suddenly traverse near the 19.00000 level again, this as the USD is perceived to be weak in many currency pairs will bother speculators. However, swift selling did occur after this high was hit, which is a healthy sign.
Trading today and tomorrow in the USD/ZAR should be done carefully as financial institutions return Forex to full volume. Choppy conditions are likely. The swift increase in value of the USD/ZAR from the lows of early last week to almost one month highs is troublesome. However, if risk appetite continues to show signs of growing in global markets, perhaps the USD/ZAR will start correlating to the belief the USD will grow weaker again in the near-term. Speculators need to be careful.
USD/ZAR Concerns will Remain Troublesome Mid-Term
South Africa is unlikely to solve its internal economic problems in the mid-term. Concerns regarding corruption and ineffective leadership in the nation remain at high levels. However, the USD/ZAR has been able to demonstrate the ability to mirror the broad Forex market remarkably well – yes, with a fair amount of volatility too, so speculators should not be scared away and may in fact feel attracted to the currency pair.
- The 18.80000 level for the USD/ZAR as resistance will be important.
- If the currency pair can maintain value below this ratio, selling forces may continue to target lower depths and support levels may prove vulnerable.
USD/ZAR Short Term Outlook:
Current Resistance: 18.78700
Current Support: 18.74100
High Target: 18.83600
Low Target: 18.61800
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