The USD/ZAR hit lower values not traversed since February of 2019 in the first week of June, but soon afterwards the Forex pair began to reverse higher.
The month of June delivered dramatic results for the USD/ZAR. As July gets ready to start, the USD/ZAR is trading near a value of 14.35000 as of this writing. However on the 6th of June the USD/ZAR actually touched marks close to 13.35000 before an incremental rise upwards began to be demonstrated.
Technically the USD/ZAR remains within its mid-term bearish trend, but the last three weeks of trading have certainly tested the willpower of bearish speculators, particularly if they have remained stubborn and continue to test the waters of the Forex pair trying to anticipate a reversal lower. The move higher off of the long term lows which were last experienced in February of 2019 may have been a natural reaction to the lower depths of the USD/ZAR being hit. However, there is little doubt that there was also a helping ingredient stirred into the USD/ZAR’s mix from the shadow of the U.S Federal Reserve.
Evidence certainly points to the Fed’s FOMC Monetary Policy Statement because on the 16th of June, the USD/ZAR spiked higher. The date is not a coincidence readers, it is the date the U.S central bank essentially took on a ‘suggested’ hawkish tone as it said in 2023 investors should expect interest rate hikes.
Yes, you read that correctly, the U.S Fed suggested they will raise interest rates in 2023, not now. This leaves the door open to two years of economic developments which may be difficult to foresee. Yet, the Forex market including the USD/ZAR reacted violently higher. Speculators who have technical perceptions are right to be rather suspicious about this move higher within the USD/ZAR and be skeptical regarding the velocity of the change in value attained because of the Fed’s bluster from the States.
Technically bearish traders may have plenty of reason to continue looking for downside momentum to be demonstrated. If traders decide to be aggressive sellers, it is urged that risk management via stop losses be used at all time. However, traders who believe there is more potential risk reward to be found by selling the USD/ZAR could be proven right, the problem though is timing a reversal, and it can also be costly if a trader steps in front of the existing trend too fast.
South African Rand Outlook for July:
Speculative price range for USD/ZAR is 13.65000 to 14.85000.
Taking a look at the upside potential, the USD/ZAR has plenty of resistance in its path, but the Forex pair has spent the past four weeks proving resistance levels rather vulnerable. The question is if momentum can continue to surge higher and there is reason to believe it cannot. But if the 14.50000 level is penetrated higher, traders could eye the 14.60000 to 14.70000 junctures as legitimate targets. Due the ground the USD/ZAR has already gained, it seems unlikely the USD/ZAR can traverse much higher. The last time the Forex pair touched the 14.85000 level was on the 1st of April. But the date of April Fools should be a warning for everyone who believe too much in their own perceptions.
If downside momentum can be reestablished speculators may suspect the movement could produce sudden volatility, particularly if support levels begin to wobble and important psychological barriers are broken. Having traded near the 13.35000 mark in the first week of June, this might be wishing on too much ground to be attained. However, if the 14.30000 and 14.20000 levels falter, there would be reason to look to see if values are able to be sustained below 14.20000. If this happens speculative bears could certainly target the 14.10000 and 14.00000 without much imagination. If the 14.00000 proves vulnerable the USD/ZAR could find itself safely back within the stronger part of its bearish price range in July and ready to retest lower depths again.