- The USD/ZAR as of this writing is near the 19.17000 ratio with fast fluctuations being displayed.
- Traders are advised to use entry price orders to wager on the currency pair as volatility is abundant.
- The USD/ZAR is traversing above the 19.00000 level for the first time since April 2024. Ladies and gentlemen, this means the currency pair is above values seen when the South African election took place in June 2024.
There is a difference this time regarding the value of the USD/ZAR now compared to April 2024. The weakness in South African Rand is actually being seen because USD centric strength is significant. The jobs report from the U.S this past Friday added fuel onto fire when hiring results came in stronger than expected. Financial institutions now have an outlook that does not include U.S Federal Reserve interest rate cuts over the mid-term.
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19.00000 as a Barometer of Fear in Forex Markets
The South African Rand is correlating to the broad Forex market in a healthy manner. South African Rand users will not be happy with the results as they watch their currency lose value, but the reasons for the loss of value are not because of a sudden lack of confidence developing in South Africa. It is because global financial institutions are suffering panic like attacks regarding outlooks over the mid-term. Many cash forward transactions placed the past couple of months by big players likely believed the USD was going to start becoming weaker.
These mid-term outlooks have now run into a brick wall and Forex has displayed significant selling of the major currencies including the EUR and GBP short-term. Price velocity is fast, and day traders need to remain alert as a rebalancing takes place by financial institutions. The 19.00000 level has served as a barometer in the South African Rand as a sign of nervousness in the USD/ZAR the past year. When the USD/ZAR traverses above the 19.00000 this has been seen as a value that is too high. However, global conditions are nervous, and a short-term fix is likely going to be quite volatile.
Speculative Wagers and Battling Highs in the USD/ZAR
Looking for additional upside in the USD/ZAR feels like a dangerous notion. But betting against the existing trend feels equally dangerous. The U.S will release important inflation data on Tuesday and Wednesday. The USD/ZAR feels overbought.
- Technical ratios above the 19.17000 level look high and will likely spark attempts seeking reversals lower.
- The USD/ZAR above 19.00000 may feel wrong, but it is a clear sign global traders are worried about USD strength.
- Looking for lower values is tempting but should be done with extreme cautious and solid risk taking tactics in the USD/ZAR.
USD/ZAR Short Term Outlook:
- Current Resistance: 19.18100
- Current Support: 19.15900
- High Target: 19.20010
- Low Target: 19.09900
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