The USD/ZAR is near the 16.43250 ratio per this writing with a rather early wide spread being demonstrated via brokers’ platforms, this as risk adverse sentiment threatens the broad Forex market.
The USD/ZAR has remained in a rather tight trading range the past handful of days. As of this moment the USD/ZAR is near the 16.43250 ratio as a rather wide spread between bids and asks are exhibited. Trading this morning across Forex has seen complicated mixed early reactions as major currencies try to find equilibrium with the USD as financial institutions likely remain rather nervous about short term positions.
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Global news centering on the Iran situation and a possible U.S military action is playing a role in the uneasy outlooks of large players in Forex, but domestic news from South Africa may not be helping financial institutions and possible bond investors from afar feel comfortable. South Africa’s naval exercise with BRICS+ nations this past week has caused a furor, and from notably the U.S because of Iranian participation.
Stable USD/ZAR Nevertheless
Early trading this morning in the USD/ZAR did see a move higher as the 16.45000 realm was tested momentarily, but oversold conditions seemed to have kicked in and have taken the currency pair back to a lower testing ground. On Friday before going into the weekend the USD/ZAR surged briefly to the 16.47750 vicinity, but also reacted with selling and went into the weekend near its current prices. Traders early today should be careful of quick moving fluctuations.
It is likely unwise to try and correlate the sudden higher moves of the USD/ZAR to talk about Iran’s involvement the past week in naval exercises near Simon’s Town. However, it is something worth keeping an eye on regarding reactions from international investors who will monitor what the U.S reaction is and how it will affect South Africa’s participation in AGOA – the African Growth and Opportunity Act - which is a U.S commercial trading agreement.
USD Centric Trading and the South African Rand
Yet, for the time being the USD/ZAR is likely trading under the influence of USD centric price action which has been rather choppy the past handful of days due more to U.S economic data and concerns. And importantly the USD/ZAR remains incredibly close to where it has been trading not only last week, but since the first week of January.
- The USD/ZAR continues to traverse within long-term lower boundaries not seen in a sustained manner since August of 2022.
- The U.S Fed will conduct its FOMC policy meetings in the last week of January, but for the moment it doesn’t appear the U.S central bank will cut interest rates in the near-term.
- Day traders still may be tempted to sell the USD/ZAR if it hits perceived resistance levels above, but they must also be wary of potential nervousness generated from news developments about Iran and possible U.S military actions.
USD/ZAR Short Term Outlook:
Current Resistance: 16.44500
Current Support: 16.40900
High Target: 16.49100
Low Target: 16.38900
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