USD/ZAR Forecast: September 2023

The USD/ZAR climbed upwards in August and brought its mid-term higher values into sight for technical traders to consider, as the global forex market also dealt with the ramifications of a stronger USD.

The USD/ZAR started the month of August below the 18.00000 value and traders who had visions of further bearish momentum developing had reasons to believe they may be able to pursue more selling. However, the USD/ZAR early in August, actually in the last few days of July, started to show signs of pressure which would ignite upwards. The USD/ZAR was trading near the 17.55000 ratio briefly on Friday the 28^th of July, but by Monday the 31^st of July started to climb.

Nervous sentiment in the global markets ignited in late July, and the climb higher that suddenly began to build price velocity the first few days of August was evident in the USD/ZAR, and the currency pair was touching the 18.76000 ratio by the 3^rd of August. By the 15^th of August the USD/ZAR was challenging the 19.30000 level, this as the currency pair mirrored the results in most major currencies teamed against the USD, which was producing a lot of strength based on risk adverse sentiment.

The current price of the USD/ZAR is near the 18.52800 level as of this writing and it is near values it saw on the 2^nd of August. The Forex pair has been able to withstand the storm of volatile trading and seemingly has begun to deliver some bearish momentum again. Last Friday on the 25^th of August the USD/ZAR did hit the 18.90000 vicinity higher again, but resistance proved durable and the currency pair moved lower and has sustained its relative ‘depths’  the past few days.

Global financial institutions are certainly nervous regarding the outlook for the U.S Federal Reserve because of its tough talk about maintaining higher interest rates through the mid-term and possibly into next year. This talk over the past few weeks sparked speculative buying in short-term U.S Treasuries, which helped spark buying of the USD and caused weakness for the South African Rand. However, an interesting thing has taken place the past couple of weeks also, U.S economic data has begun to show signs of negative pressures economically.

• Gross Domestic Product data from the U.S, which was recently released showed a larger decline than expected. Home price values in the States have also shown they are under pressure.
• The potential of additional economic data showing the U.S economy may be slowing down would certainly put the U.S Federal Reserve into a position in which they would have to become less aggressive.
• The U.S will be releasing Non-Farm Employment Change and Average Hourly Earnings on the 1^st of September and the results should be monitored.

Speculative price range for USD/ZAR is 17.68000 to 19.17000

After the incredibly volatile month of USD/ZAR trading demonstrated in August all speculators, including financial institutions likely have a high degree of nervousness while considering results for September. However, if U.S economic data continues to turn in slightly weaker results via inflation and growth prospects within consumer oriented statistics, this could set the table for further weakness in the USD. The problem with this forward looking theory is that potential downgrades of the U.S banking sector by rating agencies have made many financial houses quite skittish regarding their sentiment.

The USD/ZAR must be treated carefully, the last month of results upwards if pursued, may have led to solid profits for some speculators. Traders need to use entry price, stop loss and  take profit orders with the USD/ZAR. If support levels near the 18.50000 begin to prove vulnerable and a test of the 18.40000 values are seen and sustained, this would likely mean behavioral sentiment has taken on more risk appetite. However, traders should remain cautious and realistic regarding short and near-term targets when pursuing the USD/ZAR.

If the U.S turns in weaker than expected jobs numbers on Friday via the Non-Farm Employment Change, and Average Hourly Earnings do not come in stronger than expected this could propel more USD/ZAR movement lower.  Speculatively it feels as if there are reasons for the USD/ZAR to find more traction moving downward compared to a burst higher. However, risks regarding surprise ‘news flow’ in South Africa and a sudden downgrade of major U.S corporate banks could change that narrative.

If the USD/ZAR were to break below the 18.40000 ratio and sustain prices underneath this level for a couple of days it could spark more selling. However, the USD/ZAR has been volatile the past two months and there are reasons to be conservative when pursuing the currency pair.

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