USD/ZAR: Reversal Higher Brings Early June Values into Sight

Robert Petrucci

The USD/ZAR has experienced a reversal higher as nervous sentiment shadows the global Forex markets.

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The USD/ZAR has moved higher in early trading today and this has come after the Forex pair touched an important low of nearly 13.51000 on Friday. The USD/ZAR reversed off the low on Friday and went into the weekend near the 13.73000 level. In early trading today, the USD/ZAR has battled within a narrow range, but maintained its upward stance near short-term highs. In early June, the USD/ZAR traded near the 13.80000 marks.

Two considerations can be contemplated regarding the reversal from the lows seen on Friday. The USD/ZAR has been within a long-term bearish trend, and the move higher achieved late last week can be viewed as normal cyclical price action. However, while technical perspective is vital, it should also be taken into account that global Forex is likely starting to see positional transactions taking place as financial houses get ready for Wednesday’s U.S FOMC Policy Statement.

Trading conditions within the USD/ZAR the next couple of days will certainly be affected by trading which is conducted to guard against risk. The move higher seen in the USD/ZAR since last Friday should be viewed with the consideration that nervous trading may persist short term. Speculators who continue to favor the long-term bearish trend of the USD/ZAR may see the current upwards momentum as a selling opportunity. It will be crucial not to be too early as a seller of the USD/ZAR, if the Forex pair still has a leg up to attain. 

Resistance near the 13.76000 to 13.80000 junctures should be watched intently. If these values are punctured higher, the USD/ZAR could have further room to traverse higher if price fluctuations become volatile. While it would be easy to point to the 14.00000 mark as a potential high for the USD/ZAR if nervous technical volatility persists, this value could prove too far away. If speculators want to be buyers in the short term and take advantage of incremental moves higher, it might prove more worthwhile to be less greedy and aim for the 13.78000 to 13.38000 levels as take-profit considerations.

Traders who have produced profitable trading by selling the USD/ZAR should be careful in the short term and use their risk management astutely. While the long-term trend of the USD/ZAR has certainly been bearish, the short term may prove difficult to take advantage of this trajectory. The U.S Federal Reserve’s interest rate announcement comes on late Wednesday, and until then, traders should expect heightened volatility.

South African Rand Short-Term Outlook:

Current Resistance: 13.76500

Current Support: 13.67000

High Target: 13.81800

Low Target: 13.5300

USD/ZAR

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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