The South African Rand has run into support and slight reversals the past day, but its overall bearish trend continues to look strong.
The USD/ZAR has slowed its bearish pace as the forex pair challenges important support levels and speculators wonder how much more downside potential exists. After testing vital support yesterday the USD/ZAR did seeing buying emerge, but the range for the South African Rand certainly remains within the stronger side of its downward trend.
Close support of 16.5500 is important and if this level is broken lower and a retest of the 16.5000 juncture happens traders will need to pay close attention. Upon hitting these support levels the past day the USD/ZAR has halted its selling trend and rebounded higher. However, resistance near the 16.7500 juncture has also proven capable and gives speculators a chance to test tight short term trades.
The price of gold remains rather strong and it has remained above the 1800.00 USD per ounce level for a few days. If the precious metal hold its ground and does not retrace significantly, the USD/ZAR will continue to enjoy the perception of fundamental strength. Yesterday’s test of support near the 16.5000 was significant, and like in mid-June when the South African Rand touched this level and traversed near the 16.4000 for a fleeting moment a reversal upwards quickly followed.
The USD/ZAR should be watched closely the next two trading days, if the South African Rand can hold onto its current range and not break through short term resistance violently it could mean a real test of support will develop. The question is when and how exactly? Speculators who believe the bearish trend of the USD/ZAR will continue as long as gold maintains its current price levels cannot be faulted.
Selling the USD/ZAR within a price range of 16.6500 to 16.7500 can be attempted with nearby stop losses placed above. Risk appetite does appear rather weak this morning in early global trading, but equity indices have proven resilient the past month and this temporary break may prove an opportunity to use limit orders for the South African Rand and seek further downside momentum to develop near term. Concerns about coronavirus are still rampant in South Africa, but the USD/ZAR trend has been bearish since the last week in June and it may continue.
South African Rand Short Term Outlook:
Current Resistance: 16.8500
Current Support: 16.5500
High Target: 16.9500
Low Target: 16.5000