The USD/ZAR bounced higher yesterday as the broad Forex market globally showed signs of caution based on the perceived fear the U.S Fed would remain hawkish.
The USD/ZAR moved higher yesterday, this after the currency pair was near lows late last week while trading slightly above the 18.00000 level from late Thursday until early Monday. While rolling blackouts in South Africa are certainly not helping domestic financial institutions confidence, the key factor for the move higher in the USD/ZAR yesterday was likely fear globally that the U.S Federal Reserve may be considering an aggressive interest rate stance over the next couple of months.
The USD/ZAR has not demonstrated a clear correlation to the broad Forex market on a daily basis. The USD/ZAR was near a low around the 16.70000 mark briefly in the second week of January and it did hover near lows again in early February, these were signs of health in the South African Rand as it did move with the global markets predominantly well as the USD got weaker across the board. Choppy daily conditions have been demonstrated as a combination of domestic worries in South Africa and concerns about the U.S central bank have caused volatile reactions.
Since moving upwards in early February in a rather steady manner, the USD/ZAR has not been able to attain significant downward momentum again. Missing the bearish sentiment that has surrounded the USD in a large part of the broad Forex market the past month has seen occasional moves lower certainly, but selling of the USD/ZAR has not been as strong as many of the other major currencies paired against the USD.
- The price of Gold has been hovering near the 2000.00 USD value per ounce in recent trading, in the past this would have likely helped the South African Rand’s strength, but this has not happened.
- The USD while getting weaker against many currencies over the past few weeks remains stuck within the higher elements of its long-term USD/ZAR price range.
The USD/ZAR has in fact correlated to USD strength across the board yesterday as cautious buying was ignited based on the notion financial houses may have been too aggressive regarding selling positions the past week. Technical traders certainly have resistance levels within reach of the USD/ZAR to consider, but the currency pair has traded higher than its current price value of 18.26200 before. Speculators who feel the USD/ZAR may have been overbought yesterday on the belief ‘fear’ of the U.S Federal Reserve will soften may be proven correct, but they should also use solid risk management as they wager. The USD/ZAR has a complex puzzle that must be given careful consideration.
Current Resistance: 18.29100
Current Support: 18.24300
High Target: 18.35200
Low Target: 18.19900
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