Fast conditions pervade the USD/ZAR as the currency pair correlates to widespread choppiness within global Forex. The USD has incrementally showed improving strength over the past week and a half of trading versus other major currencies since the outbreak of the Iranian war. The USD/ZAR which was within long-term lower depths has certainly seen buying cause reversals upwards and the 16.56700 ratio it now traverses is showcasing a wide spread.
Dynamic price action in the USD/ZAR is a direct correlation to broad market nervousness within financial institutions. South Africa appears to be ready to be able to get a World Bank loan of significant value, this on the backbone of a what is perceived as a more stable government because of the ruling coalition. The World Bank news however has not really helped the South African Rand, this as clarity remains murky regarding the Iranian war and its potential knock on effects to the global economy.
USD/ZAR Notions of Being Overbought
Some speculators may believe the USD/ZAR is overbought and this may prove to be correct at some juncture. However, near term day traders should likely not get too confident about a sustained move lower in the USD/ZAR being able to recapture values seen before the outbreak of the Iranian war. Yet, speculators who want to try quick hitting ventures wagering on the 16.50000 to 16.40000 levels reemerging cannot be blamed.
Risk management and proper tactics will be needed when pursuing bets on the USD/ZAR today and tomorrow. Noise is fever pitched via media and analysts, this is causing anxiety in global Forex and the volatility seen the past week and half of trading is not going to disappear suddenly.
Technical Trading versus Behavioral Sentiment
While many technical traders may be convinced that certain levels will spark reactions in the USD/ZAR, it is likely behavioral sentiment that will rule the landscape for now.
Reversals are being sparked violently depending on large orders by financial institutions which are likely having to try and keep their corporate clients calm.
The USD/ZAR touched the 16.92500 vicinity on early Monday when nervousness caused fierce spikes upwards.
Yes, the USD/ZAR has retreated from those highs but the 16.56700 ratio now being fought over and the wide spread demonstrated is a clear sign folks remain rather cautious.
The war will not suddenly vanish in Iran, and volatility in the USD/ZAR should be expected lasting into next week.
The riddle is what the noise levels will be from the Middle East and its effect on global markets.
USD/ZAR Short Term Outlook:
Current Resistance: 16.61000
Current Support: 16.53000
High Target: 16.64100
Low Target: 16.4700