USD/ZAR Forecast: Price Begins to Fall From 17.75

The USD/ZAR has rallied a bit during the trading session on Wednesday, as we are breaking above the 17.75 Rand level. This is an area that has been resistant recently, so the question now is whether or not we can break above there. If we can, it will be a nice breakout, allowing the US dollar to travel to the 18.50 ZAR region.

Underneath, we have the 50-Day EMA sitting right around the 17.20 ZAR area, and then after that, we have the 200-Day EMA near the 17 Rand level. We have been grinding higher for a while, and it’s probably worth noting that we have formed a massive “U pattern”, which is a sign that the market is trying to build up momentum. If the market can break above there, then it’s possible that we could see this market continue to build up bullish pressure.

Risk Aversion Ahead

Keep in mind that the South African Rand is a highly volatile emerging market currency, so it is worth paying attention to the idea that the global growth situation will have a major influence on how this plays out. The market participants out there will either buy the US dollar or sell it based on the idea of how they believe the global economy is going to perform. The South African economy is based on commodities and of course the idea of putting money into the continent of Africa itself.

The size of the candlestick is rather bullish, but it’s not as if we have sliced through the last vestiges of the resistance. However, we can break above the highs of the day I think that’s when buyers come in and really start to punch to the upside. If we break down below the low of both Wednesday and Tuesday, then it’s likely that that 50-Day EMA gets challenged. This is literally going to come down to risk appetite around the world, so therefore you need to pay close attention to how other markets are doing, including stock markets and commodity markets. If they start to rally, then this market will more likely than not fall a bit. It comes down to how risk-averse traders are. Right now, it certainly looks as if risk aversion still continues to be something that people are expressing in this currency pair.