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Increased Concerns and Highs Emerge Important Value

In early trading this morning the USD/ZAR challenged important higher values, as domestic concerns grow in South Africa regarding the rolling blackouts the nation faces.

The USD/ZAR traded near the 18.00000 ratio early this morning and has surpassed a high last seen on the 1st of December near the 17.95600 mark.  South African and global financial institutions are concerned about the ongoing problems regarding reliable electricity supply in the nation. Yes, the strong U.S jobs numbers nearly ten days ago certainly added some fuel to the strong USD/ZAR, but it has likely not been the central reason for the weakness of the South African Rand.


The USD/ZAR is trading plainly in sight of the important 18.00000 ratios, which it did sustain values above frequently from late September until early November 2022. While the broad Forex market has shown an ability to creep away from the highs caused by the stronger USD on the 3rd and 6th of February, the USD/ZAR has continued to gain momentum upwards. Speculators may feel the USD/ZAR has been overbought, but sellers of the currency pair should be extremely cautious.

U.S CPI Data will be released on Tuesday and will it affect the USD/ZAR

U.S. inflation data will be released tomorrow via the Consumer Price Index reports and volatility in Forex, including the USD/ZAR will be demonstrated.  However, even if U.S. inflation comes in weaker than anticipated its impact on the USD/ZAR over the mid-term is questionable because of the shadows of the rolling blackouts South Africa is persistently dealing with as economic production is reduced.

Late last week the ANC-led South African government decreed the State of Emergency regarding the inability to properly supply electricity. However, critics of the ANC say the government leadership is part of the problem and notes that mere words and more corruption will not solve the current dire infrastructure crisis. Financial houses in South Africa understand the complex puzzle the nation faces, and global trading institutions are aware of the economic knock-on effects caused by poor leadership.

USD/ZAR near Important Resistance this Morning

  • If the USD/ZAR sustains a value above 18.00000, technically targets are legitimate near the 18.03000 and 18.06000 short-term.
  • Highs near the 18.50000 ratios were hit in October and early November of 2022 in the USD/ZAR, but traders should remain realistic and not overextend their bullish wagers.

The domestic economic issues caused by the electrical crisis are not going to disappear overnight in South Africa. The USD/ZAR will remain volatile and speculators pursuing the currency pair need to remain cautious. Reversals lower will certainly be demonstrated, and tomorrow’s U.S inflation numbers will cause a fast market. Going long the USD/ZAR and looking for more short-term price action higher may be the right bet, but risk management is critical.                                                                                                  

USD/ZAR Short-Term Outlook:

Current Resistance: 18.02000

Current Support: 17.94350

High Target: 18.06400

Low Target: 17.86100


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