The USD/ZAR is set to begin trading in 2023 around the 16.97100 price; this is only a sliver higher than the low for currency pair in November when it hit a depth of 16.91200 approximately. However, the fact the USD/ZAR will start January near these lows doesn’t tell the whole story, the USD/ZAR experienced solid reversals higher in December also, the sharpest one on the 1st of the month, when the Forex pair nearly hit 17.96000.
By December the 7th the USD/ZAR had traded lower again and was near 17.05000. The lows and highs and return to lows happened a few times during December. The ability of the USD/ZAR to come back to November depths which had not been seen since the second week of September is noteworthy.
However, the results are also rather suspicious. While the USD/ZAR is reflecting the broad Forex world as the USD has grown incrementally weaker against many major currencies, the most recent selloff started only late last week in the midst of light holiday trading. As trading opens in January and the New Year holiday is brushed off, full volume trading may not develop for about a week. Trading results in the USD/ZAR could remain choppy until financial houses return in full; in fact the past month suggests that trading could stay volatile all of January.
Mirroring the Broad Forex Market is good; Full Electricity would be Help Too
It is no joke to speak about the problem regarding electricity supply in the country. South Africa used to export electricity to its surrounding nations as a commodity, but now doesn’t have enough to supply its own provinces and citizens due to corruption and criminal elements. In another embarrassing development this past week, Kentucky Fried Chicken of South Africa has announced some of its franchises will temporarily close until ‘load shedding’ conditions improve in the nation. Large and small businesses are continuing to be hurt in South Africa because of lack of reliable electricity. This doesn’t help the domestic economy and doesn’t help build confidence in the South African Rand.
- The 17.00000 mark should be watched carefully in the first two weeks in January, if trading can be sustained lower than this ratio this could mean the USD/ZAR is building a legitimate bearish tone and could trade to lower depths.
- The ability of the USD/ZAR to demonstrate three significant reversals higher after flirting with support is troubling, but the highs made during December incrementally as the month progressed showed less power when a one month chart is examined.
USD/ZAR Outlook for January 2023:
Speculative price range for USD/ZAR is 16.56000 to 17.63000
Support for the USD/ZAR remains questionable and the higher moves after touching lows may make sellers nervous. However, the currency pair somehow has achieved a rather durable bearish run and it has ended the trading year near important support levels. If the 16.90000 mark can be challenged and proven vulnerable there might be a suspicion additional selling could develop. The 16.80000 to 16.70000 could find targeted trading by large institutions if sustained selling is generated.
However, the results of December should serve as a warning for speculators who have overly ambitious price targets below. The reversals higher also serve as a reminder that risk management is essential, because the USD/ZAR could remain volatile due to sudden news developments from the nation that affect trading confidence in the South African Rand.
If a reversal higher breaks out and touches resistance levels below previous highs technically per the one month chart, this may continue to act as a bearish indicator. However, if a move upwards suddenly were to break the 17.25000 mark and begin to challenge the 17.31000 to 17.40000 ratios this would be a sign the trading waters remain murky in the USD/ZAR and extreme caution is needed. Speculators should remain patient and the first week of January may prove important as a way to monitor the USD/ZAR as full volumes return slowly for the Forex pair.
Ready to trade our Forex forecast for the coming month? We’ve shortlisted the best Forex trading brokers in the industry for you.
