Short-Term Lows Produced After Stumbling from Highs

If the USD begins to see some erosion in value against other major currencies this will certainly help the USD/ZAR trade towards lower values. 

• The USD/ZAR is trading fractionally below the 19.00000 level as of this writing.
• The USD/ZAR hit a high of nearly 19.33780 on Wednesday of last week but has fallen from these prices the past few trading days.
• Behavioral sentiment in the broad financial markets remains nervous and USD/ZAR traders may be able to use the 19.00000 ratio as a barometer today regarding which way the wind is blowing in Forex.

The USD/ZAR has certainly been affected by the strength of the USD in the past month and a half. Unfortunately, there are concerns also starting to get louder once again regarding South Africa’s domestic problems regarding electrical outages. Load shedding as it is called in South Africa has seen planned blackouts increase again in the past few weeks.

Also, there are reports about a shortfall of available funds in the South African government to meet its financial needs. These domestic issues in South Africa and nervous sentiment in global financial markets could create a relatively durable support level for the USD/ZAR.

If the USD begins to see some erosion in value against other major currencies this will certainly help the USD/ZAR trade towards lower values. Speculators who attempted to wager on downside momentum developing the past couple of weeks likely found difficult results. A sustained move under 19.00000 could spark additional selling sentiment in the USD/ZAR. And the ability to trade in a correlated manner to the broad Forex market for the USD/ZAR remains vital. The USD/ZAR was trading near the 17.42000 vicinity in late July.

While the USD/ZAR has been affected by broad market data globally the past month and a half, U.S. economic data this week could effectively begin to create a change in direction if statistics are favorable in the opinion of financial institutions. Important CPI and PPI data will come from the U.S. later this week and if U.S. inflation can show that it is decreasing this could help create some lower momentum for the USD/ZAR.

• Price velocity in the USD/ZAR should be watched early this week, particularly after testing higher prices last Wednesday.
• If fast momentum lower is generated it could mean a shift regarding USD sentiment is starting to occur.
• If the USD/ZAR breaks below the 18.90000 level near-term this could be a signal financial institutions think recent buying of the currency pair was overdone.

Current Resistance: 19.01000

Current Support: 18.95010

High Target: 19.07800

Low Target: 18.89400

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