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USD/ZAR Forecast: May 2023


Although the USD/ZAR finished the past week with some selling, it is clear that nervous results are still being produced in the currency pair as financial institutions worry.

The USD/ZAR went into this week with a mark of nearly 18.26750. There was a brief amount of downward price action for the USD/ZAR before going into the weekend, but the results will not likely trigger a parade of optimistic bearish sentiment. Financial institutions in South Africa and abroad continue to be concerned with the nation’s economic conditions and this is having an effect on the USD/ZAR. While the currency pair correlated to the broad Forex market, the ability of the USD/ZAR to remain within the higher elements of its long-term price range is quite evident and troubling.

The USD/ZAR began the month of April near lows, having produced selling at the end of March the currency pair was near the 17.70000 ratio when April’s trading began.  By the 5th of April the USD/ZAR was up again and beyond the 18.00000 level and it remained above this key psychological support level most of the time moving forward. On the 14th and 20th of April, the USD/ZAR did challenge the 18.00000 with momentary trades below this level, but support remained durable for the USD/ZAR.

South Africa continues to remain in the dark regarding its supply of electricity. Rolling blackouts have increased in the past month and this continues to hit business production considerably in the nation. Questions continue to be asked about the leadership of the South African government, and there hasn’t been much reason for financial institutions to suddenly form an optimistic attitude about the economic outlook for South Africa.

A high of nearly 18.53600 was produced by the USD/ZAR on the 10th of April. Selling did take the currency pair to lows which tested the 18.00000 mark, but support produced swift buying again. This past Wednesday the USD/ZAR traded again towards higher marks and touched the 18.45100 level. Thursday’s weaker than expected U.S Advance Gross Domestic Product numbers helped the USD/ZAR selloff briefly and a low around 18.22700 was demonstrated. However, this low was not exactly a breathtaking downturn and the USD/ZAR found buying action and went into the weekend above this ratio. The 18.11000 to 18.40000 price range for the currency pair remains interesting.

  • The U.S Federal Reserve is likely to raise their Federal Funds Rate this Wednesday by 0.25%. The hike has been digested by traders already.
  • Financial houses will react to the U.S central bank’s FOMC Statement regarding rhetoric. A more dovish Federal Reserve could spark some selling of the USD/ZAR.
  • This coming Friday the U.S will release Non-Farm Employment Change results and Average Hourly Earnings. These numbers will stir the USD/ZAR.
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Speculative price range for USD/ZAR is 17.81000 to 18.63000

The ability of the USD/ZAR to remain rather comfortably above the 18.0000 does not offer bearish traders much hope of a sudden lower reversal building momentum and being able to sustain price action. The USD/ZAR looks to have rather solid support currently around the 18.10000 ratio, any move below this level before Wednesday’s U.S Federal Reserve monetary policy announcement is likely based on speculative positions being taken. The U.S Federal Reserve is almost certainly going to increase interest rates this Wednesday, it is their rhetoric regarding outlook that will affect the USD/ZAR going forward. Expect choppy conditions before and after the FOMC Statement.

A legitimate problem exists for USD/ZAR traders regarding outlook because of the shadows that are over the South Africa economic landscape. While the price of Gold continues to be stable and the 2000.00 USD per ounce price is attractive, and in the past would have helped USD/ZAR bears become optimistic, the results of the Forex pair unfortunately remain problematic. Support levels continue to prove durable and until the 18.00000 is broken lower and is sustained for a while, choppy trading may continue to be produced. Traders who insist on pursuing the USD/ZAR should be careful and perhaps accept the notion that quick hitting targets will work best with the currency pair. Resistance above has also proven strong and caused reactions too, the USD/ZAR has plenty of nervous sentiment which will continue to cause choppy conditions.

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