As of this morning the USD/ZAR has seen a slight rise and is near 16.98300, but the currency pair continues to show a tendency to sustain its lower realms as it bounces closely around support.
The South African Rand has continued to turn in a solid performance against the USD and is demonstrating some power as it remains rather solidly below 17.00000 in early trading this morning. The USD/ZAR on early Friday flirted with the 16.90000 vicinity. Day traders need to understand the spread between bids and asks remains rather wide in the currency pair. Entry price orders are strongly advised when attempting to swim the waters of the USD/ZAR via speculative endeavors so there are fewer surprises regarding the price fill.
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Behavioral sentiment in the South African Rand has continued to discount risk premium rather well over the past handful of months. Financial institutions feeling a bit more comfortable about the USD/ZAR have certainly created a better mid-term outlook for bearish perspectives. Plenty of people are echoing the rather strong performance of South African bonds. However, let’s remember that while the sun is shining, domestic concerns do exist in South Africa, thus the current downward trend of the USD/ZAR may start to run into some headwinds.
Federal Reserve and Near-Term Speculation
There is no denying the USD/ZAR has done rather well for traders pursuing selling positions, yet the currency pair can certainly still produce sudden reversals higher. The ability to break below the 17.00000 level and sustain price action below is another optimistic sign. But the U.S Federal Reserve has clearly been bet on by financial institutions regarding an expected interest rate cut this Wednesday of 25 basis points.
Forex is not easy and day traders should not be sucked into thinking the puzzle is going to be uncomplicated in the coming days. Financial institutions have clearly positioned themselves for the Fed to cut interest rates on Wednesday. Thus the value of the USD/ZAR has had the rate cut baked into its value already. Meaning that the Fed’s FOMC Statement will be the machine that moves market sentiment next – because of forward looking pronouncements that will be made.
16.90000 as Targeted Dreamland
Day traders should not get over exuberant and bet that the movement lower in the USD/ZAR is going to continue without reversals upwards. Hitting the 16.90000 vicinity late last week and then reversing higher has proven the currency pair can move upwards.
- The question perhaps for conservative traders is where resistance levels will steadily produce additional downside traction.
- While some wagers may aim for the 16.90000 mark, this may prove complex.
- Simpler bets looking for quick hitting targets below with take profit orders working could be a better way to take advantage of movements in the USD/ZAR.
- Downside trends are lovely, but the velocity of the move lower can run into interference.
- The Fed’s interest rate cut has already been bet on, now the USD/ZAR has to show what financial institutions think about the currency pair’s outlook beyond this Wednesday.
USD/ZAR Short Term Outlook:
Current Resistance: 16.98800
Current Support: 16.97690
High Target: 17.01600
Low Target: 16.94600
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