The USD/ZAR has produced a tight consolidated range, but also tested significant support near the 16.10000 juncture. The South African Rand has produced sustained trading within the lower depths of its value as it continues to demonstrate the ability to traverse towards important support. Speculators need to decipher their outlooks carefully in the coming days and make sure they understand the difference between short term and mid-term perspectives.
Global risk appetite is a key ingredient within forex and the coming days could be tricky as investors position themselves ahead of the US elections. Short term trading may not reflect longer forecasts and this sets the table for the opportunity to engage in the USD/ZAR using two different approaches. While the South African Rand certainly is showing the ability to create a solid value range within the lower depths of its mid-term bearish trend, it will also face uncertainty these next few trading days as investors try to position portfolios with a conservative approach.
Speculators will have to decide if support levels represent better wagers compared to resistance junctures up above. Risk reward scenarios are tentative short term when taking into consideration the notion forex will become cautious as the US elections approach. However, the impressive ability of the USD/ZAR to challenge important support cannot be brushed aside and this may continue to act as a magnate for traders who believe the South African Rand is about to puncture support levels below.
The 16.10000 juncture has proven difficult the past handful of months; the support level has been flirted with a few times but has not produced solid trading below. The last time the USD/ZAR was able to trade under this important mark was in the second week of March, before the USD surged against most currencies as risk adverse conditions took hold and coronavirus fears escalated.
The USD/ZAR is within a tight consolidated range which may produce a sudden burst of volatility near term if speculative trading mounts as US elections are anticipated. Some speculators may believe accumulation of the South African Rand is gaining momentum via selling positions of the USD/ZAR, but this could prove a dangerous notion.
Traders should use limit orders if they want to continue to test support levels below by entering sell orders when higher resistance is approached. Risk management should be a guide for all risk takers short term as the trend in the USD/ZAR is pursued.
South African Rand Short Term Outlook:
Current Resistance: 16.33000
Current Support: 16.16000
High Target: 16.47000
Low Target: 16.08000
