In late night trading the USD/ZAR came within the 17.58000 vicinity, but after challenging values not seen since the second week of September, the currency pair has sold off a bit and is now around 17.46400.
Swift changes in value are likely causing speculators rather dynamic trading results in the USD/ZAR. The currency pair came within the 17.58000 ratio late last night as the USD surged in Forex across the board. The USD/ZAR then shifted slightly lower and as of this writing is near the 17.46400 level, but with a wide spread being clearly demonstrated.
Forex conditions in all major currency pairs have been volatile the past week. Last Wednesday the USD/ZAR declined to the 17.0700 vicinity, this as financial institutions positioned themselves before the U.S Federal Reserve interest rate announcement. After the Fed cut the Federal Funds Rate by 25 basis points as anticipated, the insistence of the U.S central bank that they had no outlook – except for a uncertainty – for December’s interest rate decision caused anxiousness, Forex became rather combustible.
Long-Term Lows Turn into Mid-Term Highs Quickly
The USD/ZAR had been one of the better performing bearish currency pairs over the past month. The USD/ZAR consistently showed that financial institutions were leaning into a weaker USD centric stance. However, after touching lower realms last week momentarily, the strong reversal higher that has ensued has delivered a reminder the USD/ZAR can move very fast for day traders.
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Broad markets today may continue to produce nervousness that creates risk adverse sentiment. However while global equities may struggle, there are also technical charts via the U.S Dollar Index that show the recent climb of the USD is now touching resistance via a six month chart that may make some speculators believe a reversal may develop. Yet, this doesn’t guarantee that stronger selling in the USD/ZAR will ignite in the short-term. The higher ground in the USD/ZAR can certainly be looked upon suspiciously by those with bearish perspectives, but it should be done with caution.
Clarity in Short Supply for Forex
While the Federal Reserve may not have an answer regarding its interest rate decision in December, some financial institutions may still believe the Fed will cut again.
- However, the view that another interest rate cut is needed is not held by everyone, and this will create choppy conditions over the next couple of days.
- The U.S government shutdown remains in full effect and looks like it will remain a stubborn political game.
- Because of this day traders are advised to treat the USD/ZAR carefully as large players try to gain clarity when it is in short supply.
USD/ZAR Short Term Outlook:
Current Resistance: 17.47500
Current Support: 17.45960
High Target: 17.53800
Low Target: 17.39970
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