- The USD/ZAR went into this weekend near the 18.84610 mark which was substantially lower than the higher realms being tested only two days before when the currency pair was near the 19.10640 level.
- The highs seen on the 28th of March retested values not seen since the first week of the month.
- While many traders may have gone into the weekend optimistic regarding the bearish momentum of the USD/ZAR and its ability to trade lower, financial institutions likely remain quite nervous regarding the currency pair.
Trading volumes this past Friday were very thin because of the Good Friday holiday. Trading that opens tomorrow for the start of April will continue to see light volumes as Easter is concluded. The start of trading this week will likely be reactive and speculators should expect to see a healthy amount of choppiness over the first few days of this week as financial institutions seek equilibrium for the USD/ZAR. Many shadows continue to hover over the currency pair.
USD/ZAR as the U.S Federal Reserve Faces Questions
The USD continues to trade in a stronger framework across Forex as concerns about the U.S Federal Reserve’s outlook perplex financial institutions. Mixed economic data via stronger than expected inflation numbers has become rather problematic for the U.S central bank which is has said they would like to cut interest rates. Last Friday’s PCE Price Index data met expectations for this month, but a revision upwards for the previous total should be noted, and will certainly cause anxious thoughts regarding the Fed’s ability to become more dovish.
The USD/ZAR price velocity downwards after Thursday’s highs which were comfortably above the 19.00000 level should make bearish traders somewhat cautious. While the USD/ZAR certainly created lower momentum, the move happened in a Forex market that was missing plenty of institutional traders. Many other major currencies teamed against the USD continued to struggle going into the weekend, so the move lower in the USD/ZAR needs to be treated carefully. A reversal higher that is sustained into Tuesday of this week would be a sign that bearish sentiment is not as strong as was shown late this past week.
U.S Jobs Numbers and Gold Sentiment in the USD/ZAR
Gold went into the weekend near record values as its trades above 2,230.00 USD per ounce. But experienced traders know the price of gold while important for the South African Rand only serves as sentimental support and does not cure the problems caused by the mismanagement fiscally of the South African government. The 19.00000 level may continue to act as a solid barometer for the USD/ZAR in April as many factors weigh into the currency pair.
- U.S jobs numbers this coming Friday will factor into USD/ZAR volatility. The U.S Fed would like to seek weaker jobs numbers in the U.S, if this happens it could create some bearish sentiment in the USD/ZAR and broad Forex market. The Fed is now looking at employment data with added significance.
- Also traders need to understand the approaching elections in South Africa are drawing closer. The vote is in late May, but financial institutions are anxious about the potential outcomes. This might continue to create headwinds against overly bearish optimism in the USD/ZAR during April.
USD/ZAR Outlook for April 2024:
Speculative price range for USD/ZAR is 18.66000 to 19.18000
Having traded at a high of nearly 19.24695 to start March and finish around the 18.84610 level is a solid accomplishment for the USD/ZAR. However, the results from the past few days remain suspicious, and moving forward concerns will be heard about the U.S Federal Reserve regarding monetary policy, and domestic economic problems in South Africa will be felt in the currency pair.
The USD/ZAR did trade to lows of nearly 18.50000 in the middle of March, but that momentum looks to have been overdone. The currency pair though did mirror the broad Forex market and this is likely to continue in April. Many people believe the USD is too strong, but selling the USD/ZAR based on this notion for short-term wagers could prove very dangerous, patience remains a vital tool for speculators.
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