- The USD/ZAR as of this writing is near the 19.01350 ratio.
- Having climbed above the 19.00000 before many times, the move above this mark may not set off alarm bells among Forex traders who merely speculate on the currency pair as if it were a ‘math’, meaning that they look at the technical features and metrics of the USD/ZAR and not the fundamental domestic issues which are taking place in South Africa.
While it can and will certainly be argued by some the USD/ZAR has moved above the 19.00000 level based on technical correlations to the USD which the broad Forex market is experiencing, and much of this may be true, other concerns fester. It is important to point out the growing concerns domestically which are affecting the South African economy and outlook mid and long-term.
South Africa Political Mismanagement: Port Disarray and Loadshedding Equal a Failing Economy
The USD/ZAR is being hampered by the shadow of government mismanagement. Shipping ports which serve as the backbone for South Africa’s logistics abroad are in chaos, largely due to congestion which is delaying vessels for offloading imports and the on-loading of exports. Electricity remains a cause for concern. Parts of the Western Cape this past weekend were hit by high stages of loadshedding which caused blackouts to last longer than usual, but also caused the failure of telephone communication towers for mobile use which harmed internet connectivity too in places.
Lack of reliable electricity has hampered small businesses owners, and the agricultural and industrial sectors are often being crippled. Why would financial institutions have a positive outlook when South Africa’s GDP is being hurt everyday by mismanagement of the nation’s infrastructure?
USD/ZAR Short-Term Tumult and Tests to Come
The 19.00000 level in the short-term must be watched as it certainly is looked upon as a psychological barometer by financial institutions. Traders tempted to participate in the USD/ZAR can take the opinion the USD is centric to the movement of the currency pair. However, traders need to keep in the back of their minds even if they are only technically inclined, South Africa economic issues are being affected by a growing distrust and weariness of the political leadership.
- If the USD/ZAR sustains the 19.00000 level near-term this could signal additional buying momentum will be seen in the currency pair and potentially cause a test of higher values seen in early February and mid-January.
- Tomorrow the U.S releases important inflation data which will affect all of Forex, including the USD/ZAR.
- A USD/ZAR move that is sustained below the 18.97000 level could attract more selling wagers, if financial institutions believe the 18.93000 to 18.88000 ratios should be equilibrium.
USD/ZAR Short Term Outlook:
Current Resistance: 19.04100
Current Support: 18.98380
High Target: 19.13700
Low Target: 18.91600
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