Flirtation with Higher Values Remains Demonstrative

Resistance near 19.0000 is an obviously important short-term indicator.

The USD/ZAR went into the weekend within sight of its one-week highs, and in early trading this morning the currency pair has managed to hold onto its higher values.  Risk-averse trading is being demonstrated in the global markets and major Forex pairs are losing battles to a stronger USD in the short term. The bullish trend of the USD/ZAR has effectively been in place since the last week in July.

The 19.00000 is an important psychological level for the USD/ZAR and is largely seen as a sign the South African Rand is losing too much value. However, if traders believe the USD/ZAR has been overbought in the near term, they are reminded that USD-centric buying positions are flourishing globally as financial institutions are rattled by a decrease in risk appetite.

The USD/ZAR did challenge highs early last week and last Wednesday the currency pair touched the 19.08450 ratio.   Technical traders can point to this higher ratio and say the USD/ZAR has incrementally lost value in the past few days, but because there has been no sustained movement lower the slight loss of value is suspicious in the short-term. 

Nervous broad market conditions should serve as a warning sign to all Forex speculators, and day traders may want to pursue quick-hitting positions in the short-term, so they do not get stuck in a losing position that suddenly exhibits strong price velocity. A low of nearly 18.65000 was tested early last week and briefly on Thursday.  Volatility may continue to boil in the USD/ZAR in the near term.

The strength of the USD in Forex has taken many financial institutions by surprise in the past month.  While the U.S Federal Reserve is likely being put into a position that will make them consider stopping their aggressive monetary policy over the mid-term because inflation data has been somewhat more ‘muted’, worries about U.S Treasuries and banking downgrades have made investors nervous the past two weeks. The risk-adverse sentiment is not likely to continue long-term, but until it shows signs of decreasing the USD/ZAR may remain choppy and within its higher price range.

• Support near the 18.91000 to 18.89000 ratios should be monitored in the short term and may serve as a target for some speculators who are looking to take advantage of reversals lower.
• Resistance near 19.0000 is an obviously important short-term indicator. If the USD/ZAR can remain below this level today and tomorrow, it could be a signal some more selling will develop.

Current Resistance: 18.99500

Current Support: 18.91700

High Target: 19.06800

Low Target: 18.87500

Ready to trade our daily Forex forecast? Here’s some of the best trading platforms in South Africa to check out.