After a Higher Move Perhaps a Downturn Developing

Trading tomorrow in the USD/ZAR could prove rather choppy as full volume returns and financial institutions begin to react to U.S data seen last Friday that was lackluster.

After trading near the 18.94150 mark on Thursday of last week and suffering a selloff early on Friday, the USD/ZAR again moved higher and went into the weekend near 18.78750. However, upon opening this morning the USD/ZAR has traded slightly lower. The volatility seen late last week mirrored the global Forex market which saw the USD surge higher against many other major currencies.

Traders need to understand that U.S. financial institutions are on holiday today because of Labor Day celebrations in the U.S., meaning transaction volume will be very low. The lack of significant trading action could mean the USD/ZAR trades rather quietly most of today and occasionally suffers a sudden price move which looks technically odd. The move higher late last week by the USD/ZAR may have also been due to a lack of large volume in the market.

Fundamental and technical USD/ZAR speculators may feel rather skeptical about last week’s move and want to pursue the potential of lower price movement based on results from earlier last week. However, nervous market sentiment globally is causing rather turbulent conditions to still be seen, and trying to challenge the higher levels the USD/ZAR is currently traversing when a one-week chart is being looked at may be difficult. The lack of big trading volume could create headwinds for any trader today hoping to catch a significant move in either direction.

Trading tomorrow in the USD/ZAR could prove rather choppy as full volume returns and financial institutions begin to react to U.S data seen last Friday that was lackluster. The USD has been stronger in the broad Forex market, and speculators may suspect the USD/ZAR will trace lower, but it may be worthwhile sitting on the sidelines and watching the currency pair traverse until Tuesday afternoon.

• A lack of major U.S. data will mean that behavioral sentiment is the driving force in the USD/ZAR over the near term. Fragile sentiment continues to cause headwinds and risk-averse conditions, meaning the USD has been stronger.
• The question is if sentiment will shift in the next two days and if the USD/ZAR can begin to challenge support around the 18.75000 to 18.70000 vicinity again.
• If the USD/ZAR moves higher and above the 18.81100 level and sustains this price action, this may mean additional nervous sentiment might keep the currency pair higher over the near term.

Current Resistance: 18.80100

Current Support: 18.77100

High Target: 18.86050

Low Target: 18.70040

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