Trading between the 18.42000 and 18.46000 levels should be watched in the USD/ZAR in the short term.
The USD/ZAR has continued to move upwards, creating a rather dynamic trend for bullish speculators as it seemingly creates a solid ground above 18.40000.
The USD/ZAR has created a powerful move higher as the currency pair has swiftly brushed aside resistance and is now challenging values not seen since early November 2022. While this may be good news for bullish speculators as the electric momentum higher is generated and possibly supplying profits for their wagers, it is not good news for South Africa.
The South African Rand is being punished by financial houses who believe the seemingly incapable leadership of the South African government is leading it closer towards economic mayhem. Since declaring the State of Emergency regarding the rolling electrical blackouts, which in fact have plagued the country for over ten years now, the outages have gotten worse. Businesses across South Africa are suffering as they struggle to be productive.
Technically the USD/ZAR may appear Highly Valued and Possibly Overbought
Traders who are tempted to bet against the USD/ZAR trend can be forgiven, but they might find their wagers on sudden reversals wrong and very costly. If the USD/ZAR continues to remain above the 18.40000 level this may spur on more nervous sentiment within the currency pair. The combination of stormy shadows hovering over South African domestic issues and the aggressive outlook for the U.S Federal Reserve regarding monetary policy are a double edged sword.
The USD/ZAR is traversing its higher price range, and the sustained trading within this upper expanse suggests the currency pair could find additional buying momentum. In October and early November of 2022, the USD/ZAR not only matched its current heights but did trade at loftier peaks. Traders aiming for price ratios between 18.46000 and 18.50000 cannot be faulted. Absolutely, reversals lower in the USD/ZAR will happen and they may be violent, thus speculators need to use solid risk management.
- The U.S. will see the release of a Consumer Sentiment reading tomorrow, if it is stronger than anticipated this could spur on additional USD strength in Forex, including the USD/ZAR.
- It is unlikely a strong downward movement in the USD/ZAR will be sustained this week, cautious buyers may want to use tests of support levels as an opportunity to bet on higher movements.
- Poor behavioral sentiment in South Africa shows little signs of improvement regarding outlook in the near term.
Trading between the 18.42000 and 18.46000 levels should be watched in the USD/ZAR in the short term. If this price range continues to find equilibrium it may suggest behavioral sentiment is not ready to suddenly produce a strong downward movement in the USD/ZAR and that additional firepower upwards could develop. Speculators betting on higher prices should not be overly ambitious within these heights, but they cannot be faulted. Risk-taking tactics will be essential in the coming days.
Current Resistance: 18.47025
Current Support: 18.40310
High Target: 18.57900
Low Target: 18.31700