At this time last week the USD/ZAR was hovering around the 16.50000 level as financial institutions were being hit by waves of cautious sentiment and the currency pair was traversing within the higher part of its mid-term range. Day traders who believed the USD/ZAR was in overbought territory at the time and wagered on lower price action hopefully had enough money in their account to be rewarded by Thursday’s selling which erupted.
The broad Forex market has been a tense trading landscape for a handful of months. The sun has not come out completely quite yet, but the potential and seemingly good direction regarding a U.S and Iranian agreement has ignited optimism. The USD/ZAR is correlating to the broad markets and has experienced a selloff which has brough the currency pair back to its lower realms.
Gap Lower and Sentiment to Come in the USD/ZAR
The current level of the USD/ZAR, as of this writing, around 16.15770 with a rather wide spread via bids and asks should be getting attention. Other major currencies paired against the USD are seeing similar behavior as USD centric weakness is a definite ingredient for the time being. Financial institutions which sold the USD/ZAR may now be asking if their exuberance should remain focused on lower targets. The USD/ZAR is now traversing in lower terrain and near values seen in early March.
However, some speculative traders who believe there is a capability to get out ahead of more momentum downwards, may be looking at prices seen before the Iranian situation began, this as the USD/ZAR traded below the 16.00000 level. But day traders will need to be careful because sentiment shifts are still a danger and a sudden surprise could cause fast reversals upwards.
Top Regulated Brokers
U.S Interest Rates and Cheaper Fuel Costs
Under the banner of large and speculative assumptions, the U.S Federal Reserve will announce its Federal Funds Rate this Wednesday. While inflation in the U.S has certainly spiked higher on higher fuel costs, the hopeful promise of an Iranian agreement has sparked lower WTI Crude Oil values the past couple of trading sessions.
If the Fed doesn’t increase the interest rate on Wednesday this could spark additional USD/ZAR selling.
However, large players may have already factored this into their positions early this morning.
Day traders need to be careful, the thought that the currency pair can go lower is not wrongheaded, but it is still speculative.
Risk taking tactics should be done with solid targets that are not overly ambitious by those with limited funds.
USD/ZAR Short Term Outlook:
Current Resistance: 16.18700
Current Support: 16.15300
High Target: 16.19900
Low Target: 16.13100
Ready to trade our daily Forex analysis? Here's a list of the best forex trading platforms South Africa to choose from.