As of this writing the USD/ZAR is around the 16.58100 mark with fast swift trading being seen as Fridays jump higher has run into additional worries early this Monday due to the Middle East conflict.
On early Friday of last week the USD/ZAR was traversing near intriguing support levels, this as the currency pair continued to show financial institutions leaning into the possibility of a stronger South African Rand as it traded close to the 16.25000 level. While downside momentum was hard to attain throughout most of last week, slight rises in value in the USD/ZAR were met consistently with reversals lower back to the support realms.
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Abruptly, things changed on Friday when the U.S stock markets began to show buying fatigue, the Nasdaq 100 started to see serious selling and suddenly the broad Forex market including the USD/ZAR reacted with risk averse sentiment. By Friday’s close the USD/ZAR was near the 16.55000 mark. However, additional fears have escalated early this morning, this after the Middle East crisis has seen military escalation again. The USD/ZAR hit a high around 16.66400 earlier this morning.
Two Days of Trading Results and a Different Playing Field
Financial institutions which were beginning to adjust their sentiment from a cautious outlook to a more positive mindset have been treated rudely the past couple of trading days. The USD/ZAR is correlating to the broad Forex market which has seen USD centric strength increase dynamically. U.S equity markets will need to be watched by all traders in the coming hours, along with interest rate yields on U.S 10-Year bonds.
Day traders who do not like attempting to swim with dangerous creatures lurking in the dark sea can be forgiven for deciding to sit today’s trading out. Being on the sidelines when volatility is strong and still may have additional storms to display is not a bad choice. The ability of the USD/ZAR to come off of this morning’s early highs is a healthy sign, but it doesn’t mean that smooth sailing in Forex is guaranteed.
Higher Levels and Overbought Considerations
Day traders who believe the USD/ZAR is in overbought territory cannot be blamed. However, picking and choosing where a USD/ZAR trade should be ignited will take technical perceptions that are not only wise, but lucky.
If the Iranian and Israel conflict which has been highlighted this morning begins to quiet, then perhaps financial institutions will start to act peacefully and not jump into USD centric stronger positions.
The move lower since hitting highs early this morning in the USD/ZAR is a good sign, but the Nasdaq 100 index’s trading in the U.S also awaits in the shadows today.
The USD/ZAR will move fast today and tomorrow.
Entry price orders and take profit targets need to be used by retail traders to guard against potential spikes.
USD/ZAR Short Term Outlook:
Current Resistance: 16.59000
Current Support: 16.56400
High Target: 16.67000
Low Target: 16.53200
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