Having finished last Friday near the 16.09900 level going into the weekend, the USD/ZAR has opened with a gap lower this morning and as of this writing is near 16.02000 with a wide spread being demonstrated. Global financial markets have produced fast early conditions in Asia this morning and Forex is seeing dynamic velocity. The ability of the USD/ZAR to traverse close to 16.00000 level is certainly a talking point in South Africa and internationally.
The USD/ZAR on Tuesday of last week had moved higher and was near the 16.47000 mark. Nervous sentiment was sparked the previous weekend and then financial institutions awaited the speech by President Trump in Davos on Wednesday. But then even before President Trump spoke, the broad financial markets had started to show a growing sense of speculative USD selling. The USD/ZAR moved to around the 16.33000 vicinity as calm came back into the market on Wednesday, and touched a low of almost 16.20000.
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Signals of Momentum for USD/ZAR
On Thursday of last week the USD/ZAR broke below the 16.20000 level and was challenging the 16.15000 ratio. On Friday more selling of the USD/ZAR developed and the 16.10000 clearly became a target. Intriguingly there was not much power within any reversals upwards, meaning the lower realms of the USD/ZAR were kept intact going into the weekend.
This morning as the broad markets opened gold and silver both continued their bursts higher along with other metals. The USD/ZAR gapped lower and has thus far not exhibited a definitive reversal higher as the 16.02000 is seeing plenty of price action. Financial institutions clearly are leaning into a weaker USD outlook and this week the U.S Federal Reserve will be making their FOMC Statement on Wednesday.
Day Traders and Short-Term Wagers
Speculators considering the prospect of an oversold USD/ZAR may feel logic is on their side, but the trend lower in the currency pair has been solid. The long-term bearish trend of the USD/ZAR has certainly shown greater velocity the past few days, but looking for a sudden reversal upwards may be wrong.
- The U.S Fed is likely to stay cautious this week and may not lower its interest rate, but it appears financial institutions believe the mid-term outlook for a more dovish Fed is correct.
- The 16.0000 is clearly in sight for speculators who like good looking clean levels to target.
- There are no guarantees the 16.00000 will be hit, but speculators cannot be blamed for wagering on slightly lower ground.
USD/ZAR Short Term Outlook:
Current Resistance: 16.02990
Current Support: 16.01980
High Target: 16.07550
Low Target: 15.99100
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