Wide Harsh Price Swings Demonstrated Late Last Week

The USD/ZAR experienced a volatile price range on Thursday and Friday of last week in the aftermath of the U.S Federal Reserve pronouncements and data reactions.

The USD/ZAR is trading near the 17.68000 level as of this writing with fast price action being demonstrated.  However, compared to the results of the trading landscape within the USD/ZAR late last week, this morning’s opening has been rather polite. Speculators are still likely trying to catch their breath after the rather wild rollercoaster ride the USD/ZAR displayed on Thursday and Friday of last week.

The USD/ZAR achieved a high of nearly 17.98200 on early Friday in the wake of better than expected U.S GDP numbers which showed economic conditions in the States are still demonstrating growth. The move higher must have set off alarms as the 18.00000 came back into focus, but this came after a low of nearly 17.42050 was seen on Thursday, as financial institutions globally reacted to what they perceived as a potentially more dovish U.S Federal Reserve monetary policy developing over the mid-term.

The stronger growth number from the U.S. on the following day countered the weaker USD sentiment momentarily. However, whipsaw-like price action was not done, and as Friday came to a close the USD/ZAR began to sell off again. Speculators not using risk management via stop losses, likely found Thursday and Friday to be expensive days if the USD/ZAR was going in the wrong direction against their positions.

As the USD/ZAR begins this week of trading, speculators should be cautious in the short term as the currency pair attempts to find equilibrium following the volatile sessions of the previous two days.  However, bearish traders may notice technically the USD/ZAR is managing to remain under the 17.70000 ratio in the short term and this could prove to be important if this resistance level is proven durable.  The lower price range of the USD/ZAR has been maintained.

Economic data from the U.S. is certainly affecting the USD/ZAR, which is a good sign. The USD/ZAR is correlating to the broad Forex market well and the currency pair has not been hit recently by concerns shadowing South Africa’s political and economic situation. The U.S will release the ISM Manufacturing PMI statistics tomorrow which will give insights regarding economic conditions in the States.

• If U.S inflation data can continue to show it is declining moderately this might help ignite more selling of the USD/ZAR.
• This coming Friday the U.S. will release job numbers, including the Average Hourly Earnings which is a key inflation reading regarding wage direction.
• USD/ZAR traders may be focused on the 17.64900 to 17.7400 and believe these marks are important regarding momentum signals today and tomorrow.

Current Resistance: 17.69900

Current Support: 17.66100

High Target: 17.74100

Low Target: 17.63300

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