Top Regulated Brokers
This currency pair remains within an elevated terrain, but in recent trading has been able to muster a bit of a reversal lower. Financial institutions and large players who watched the broad Forex market turn cautious in recent days are likely questioning the amount of further concerns developing. The USD/ZAR has correlated to other major currency pairs and this will remain an important element for short and near-term retail speculators. Fear while not being outwardly expressed can been seen in the risk adverse approaches recently taken.
USD/ZAR Pullback Meets Persistent Dollar Strength
Current conditions remain stubborn regarding USD centric strength via the solid buying of the USD/ZAR. However, in trading the past handful of hours a reflexive reversal lower has developed. Yet, the USD/ZAR remains in an elevated range and has shown the ability to sustain support levels below the past few days. Retail traders looking at technical charts can be forgiven for looking at the elevated heights of the USD/ZAR and questioning if an opportunistic moment for selling exists.
After a rather solid period of bearish trajectory, followed by some buying and durable resistance levels above, USD/ZAR speculators may believe there is room for lower values to be found. Before day traders step into ambitious selling positions though, they should consider the notion that the cautious shadow which has developed over Forex since the middle of September may still have reasons to create additional tension.
Lower Resistance Suggests Momentum Is Shifting
The USD/ZAR is near the 16.58000 ratio depending on the bids and asks coming into the marketplace. A wide spread is being seen and highlights that sentiment is fragile. While resistance since last Thursday held firm near the 16.75000 level, yesterday’s price action and early this morning’s have shown that resistance has lowered and the 16.69000 mark provided pushback. If current conditions can hold and the USD/ZAR is able to maintain value beneath the 16.60000 mark for a handful of hours, this may be a signal that financial institutions feel the USD/ZAR was overbought.
However, before retail traders rush into ambitious selling positions, they should acknowledge that current global market conditions remain reactive. There is a legitimate fear in the Forex market that a vulnerable EUR is causing more buying of the USD amongst other currency pairs. Perhaps this sentiment will start to calm down in the coming hours and near-term, but short-term wagers need to understand the concerns propelling Forex.
Why the Pullback May Not Signal a Trend Change
The upwards flight of the USD/ZAR which has seen consistent buying since the 4th of September remains a technical perception that may be hard to ignore. However, the ability of the USD/ZAR to bounce back from periodic bursts upwards has delivered a solid track record also over the past year. It is a question about perceptions. Can the USD/ZAR be sold with confidence?
While the USD/ZAR rests within its higher elevated terrain via mid-term considerations, it is worthwhile to ask if the current momentum upwards represents a change of mid-term outlooks or if a selling recovery will develop? Challenging conditions are being seen across the Forex board as USD centric strength has been dominant. Financial institutions who want to be ahead of the curve and be speculative regarding their commercial cash forward transactions have a difficult task to ponder.
USD/ZAR Price Chart – Fly Zone
Improving Risk Appetite Could Support the Rand
Selling this morning has been rather solid and this wave of pressure downward actually developed late on Monday. The USD/ZAR may be considered in a too elevated realm and large players may believer there is justification for seeking lower terrain. Impetus coming from global markets is important. Yet, major equity indices the past couple of days have done rather well via a broad perspective, showing some risk appetite remains a motivator. If this sentiment lingers it could spur on additional selling of the USD/ZAR short and near-term.
Rapid Reversals Keep the Outlook Unsettled
Reversals remain a danger for retail traders of the USD/ZAR as market conditions remain reflexive and fast spikes emerge. While the broad market may believe USD centric buying has been overdone, technical worries could cause large financial institutions to countertrade momentum as it develops – this while trying to maintain a targeted equilibrium. Day traders need to remain suspicious of USD/ZAR results today.
USD/ZAR Levels to Watch as Momentum Shifts
The near-term focus is whether USD/ZAR can sustain its pullback or regain upward momentum. The following levels provide reference points for that assessment, rather than a directional trading call.
Immediate resistance 16.58300 Whether rebounds meet renewed selling pressure near this level.
Immediate support 16.56800 Whether the pullback stabilises here or extends below it.
Upper reference 16.61200 Whether a recovery reaches this level and weakens the immediate pullback narrative.
Lower reference 16.55600 Whether selling extends toward this level if immediate support gives way.
Ready to trade our USD/ZAR analysis? Here is our list of the best Forex brokers in South Africa worth reviewing.