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Lack of Faith Displayed as Higher Range Reemerges

The USD/ZAR inched its way upwards last week and has produced sideways action since Thursday as Forex volumes have thinned considerably because of the holidays.

The USD/ZAR is near the 18.25000 level as of this morning as light trading persists within Forex because of the Easter holiday weekend.  The U.S will be open for trading today, but speculators of the USD/ZAR should acknowledge that because of thin volumes, currency pairs may continue to see plenty of sideways price action with occasional volatility erupting when a large unbalanced order is entered. Traders should monitor support and resistance levels today if they insist on participating with the USD/ZAR and beware of potential risks.

After trading below the 17.70000 mark on the 31st of March, and then being followed with additional challenges of lows on Monday the 3rd of April near the 17.75000 ratio, the USD/ZAR has incrementally traded higher since Tuesday of last week. While skeptical traders may believe the move higher has occurred because risk adverse traders bought the USD before the long holiday weekend began to unfold, the rise in the USD/ZAR also should serve as a cautionary flag for the potential of choppy results in the currency pair to be sustained.

Problems within South Africa continue to be unmasked and persistent questions about economic production and outlook are reasons for concerns. Yes, U.S Federal Reserve policy is certainly under the microscope and interest rate policy will likely be modified in the mid-term from the States. However, the combination of risks regarding South Africa’s domestic situation and U.S central bank forecasts may lead to further choppy conditions for the USD/ZAR which have been demonstrated the past handful of days.

  • While light trading is anticipated for today, the USD/ZAR will see a rapid increase in trading volume tomorrow and traders need to know important U.S data is coming this week.
  • On Wednesday the Consumer Price Index numbers will come from the U.S and give important insights regarding inflation. The outcome will affect U.S Federal Reserve monetary policy.
  • Thursday will see U.S PPI statistics, and on Friday Retail Sales and Consumer Sentiment results will be reported too.

Traders who participate in the USD/ZAR today should use entry price along with stop loss and take profit orders to guard against sudden fluctuations in the currency pair which will certainly be seen.  The lack of large volume will cause sudden price changes which do not seem to have much technical reason particularly for day traders who are trying to get a feel for the USD/ZAR based on short-term charts. The USD/ZAR is likely to maintain the upper realms of its higher range which was established last Thursday. Tomorrow however could see a test of behavioral sentiment begin, and by Wednesday the USD/ZAR may become volatile with a solid amount of volume returning to Forex.



Current Resistance: 18.27600

Current Support: 18.23100

High Target: 18.32700

Low Target: 18.18400


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