Full volume has almost returned to Forex and by early tomorrow trading will begin to resemble normal conditions, following a two-week rest period that saw USD/ZAR trade weak. The currency pair is near the ratio of 18.66850 as of this writing with rapid fluctuations. The bid-ask spread should be tracked over the next few hours and is likely to start narrowing, which will be good for speculators.
USD/ZAR continues to trade in the higher part of its medium-term range, but the broader Forex market remains quite fragile due to the behavior of financial institutions as they seek clarity on the medium-term outlook.
USD/ZAR traded in a correlated fashion with the broader Forex market. Although it may seem overpriced, traders should refrain from being overambitious about large potential downsides in the short term.
Full volume and calmer Forex conditions
Today and tomorrow’s trading in USD/ZAR will provide a solid barometer of sentiment, which after full volume shows the views of the bigger players in the global market. USD/ZAR has been trading near two-week highs, but the results are still in doubt and retail speculators may be best off watching trading over the next two days. Due to the US jobs numbers that will be released on Friday by the non-farm payrolls statistics, the near future may see unstable conditions.
The USD remains in an extremely strong position against most major currencies. The South African rand has lost value since the end of September, but it has done so in a fairly quiet fashion. USD/ZAR in the short term probably has 18.60000 as a support target which financial institutions may find logical for now, but targeting this may be too far a target for smaller traders who cannot sit and wait inside overnight positions.
The impact of the upcoming week on the short term
The South African rand may be considered within overbought territory by traders with a medium-term view. However, as fragile sentiment exists in major currencies such as the EUR, GBP and JPY, it is unlikely that the ZAR will trade in a manner uncorrelated with their behavior against the USD.
- Yes, USD/ZAR is its own currency pair, but financial institutions tend to follow USD-centric ideas against the three major currencies that influence their USD/ZAR decisions.
- A test of the range between 18.63000 and 18.71000 may be a playground produced in the short-term in USD/ZAR that could open the door for traders looking for potential reversals through technical perspectives.
USD/ZAR Short Term Outlook:
- Current resistance: 18.68700
- Current support: 18.66200
- High target: 18.71600
- Low target: 18.63300
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