USD/ZAR Forecast: July 2020

Robert Petrucci

The South African Rand began June around the 17.6000 mark and is about to begin July near the 17.4000 level. Not always known as a beacon for stability the USD/ZAR has actually produced a rather stable price range the past month and is a good forex pair candidate to follow in the month of July. The South African Rand has recovered well from its lowest values in early April when it traded versus the US Dollar near a juncture of 19.3000.

While the price change of June from the beginning of the month until the end doesn’t represent a great change. In fact the USD/ZAR did see a mark of 16.5000 touched and broken through on the 10th of June, but reversed upwards as buyers of the US Dollar stepped in. Since the middle of June the USD/ZAR has traded between a range of 17.0000 and 17.5000 consistently testing its value.

Certainly not going unnoticed is the value of Gold too. As the precious metal trades at highs and has found a solid base of seemingly fundamental support, the USD/ZAR has produced a rather tranquil trading range. Speculators who use risk management and technical ranges wisely will be tempted to explore trends depending on the time parameters they are using.

Risk appetite is always an issue when trading the USD/ZAR because of domestic concerns regarding the South African government. However, in the wake of concerns regarding coronavirus and its potential effect of the South African economy, the government has received praise for its handling of the pandemic and its transparency.

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A look at the past three months of trading shows that the South African Rand has added value and is maintaining a rather stable stance versus the US Dollar. The USD/ZAR will be affected by global sentiment, but if international stock markets gain and it is felt coronavirus is being managed on the domestic front in South Africa with transparency, the South African Rand may continue to find it creates additional strength. Selling the USD/ZAR at its current levels if a speculator has an optimistic amount of risk appetite and believes the core value of gold will stay strong may prove enticing.

Support for the USD/ZAR appears to be the 17.0000 level and resistance is around the 17.6500 mark. Interestingly the USD/ZAR has not touched the 17.6000 juncture since late May. The ability of the South African Rand to stay below key resistance indicates a test of support levels may continue if risk appetite stays positive.

Traders need to practice good risk management with the USD/ZAR because it has proven susceptible to sudden bursts of volatility. A speculative trading outlook doesn’t offer enough evidence for a dramatic move however. Meaning that traders venturing into the USD/ZAR could find opportunities as they test the currency pair’s known range in July.

Selling the USD/ZAR and targeting support near the 17.0000 levels with short timeframes in mind and the ability to act quickly may prove the best trading plan for the currency pair in the meantime.

South African Rand Outlook for July:

Speculative price range for USD/ZAR is 16.4000 to 18.0000

Support at 17.1000 is a targeted juncture and may be create a catalyst for 16.9000 if broken

Resistance at 17.7000 may prove capable and cause reversals, unless the 18.0000 juncture is toppled upwards

EURUSD Monthly

About the Author
Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.
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