Choppy conditions once again flourished in the USD/ZAR. Traders of the currency pair should compare a one-month December chart of the USD/ZAR to a one-month November technical chart; they will see similar levels challenged. However, the month of December in the USD/ZAR did produce a healthy correlation to the broad Forex marketplace. The U.S Federal Reserve made a rather dovish-sounding FOMC Statement which created plenty of USD weakness in the middle of December.
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A high of nearly 19.14200 was seen in the USD/ZAR on the 11th of December, but by the 15th of the month, a low around the 18.10000 was being challenged. Intriguingly this low was tested in the middle of November also. Taking into account all of the economic concerns facing South Africa and the potential troubles that are ahead in the nation, the USD/ZAR has again returned to a test of important support levels despite the concerns.
January and a Suspicious Look Ahead for the USD/ZAR
Suspicions remain regarding potential problems economically in South Africa, but the ability of the USD/ZAR to fight lower and finish December’s trading near the 18.28175 level is a potentially good sign for speculators who use a global perspective when trading currency pairs. The USD/ZAR is near support that did prove rather durable in November. Yes, the USD/ZAR is also in sight of mid-term values seen in early August, which does correlate to other major currencies paired against the USD.
Price velocity for the USD/ZAR remains troublesome if solid risk management is not being used because of the rather dynamic results that suddenly can emerge. USD/ZAR speculators should use careful risk taking tactics, the use of conservative leverage is important. While traders may feel tempted to test additional downside potential in the USD/ZAR, they must guard against the possibility of fast reversals upwards.
- Trading early this coming week will see low volumes in Forex and this will affect the USD/ZAR.
- Support near the 18.25000 mark has proven rather durable and this may provide USD/ZAR speculators with a key psychological level.
- If this support level can be proven vulnerable and trading is maintained beneath the 18.25000 for a solid duration it could spark other sellers of the USD/ZAR.
USD/ZAR Outlook for January 2024:
The speculative price range for USD/ZAR is 17.81900 to 18.68000
Traders of the USD/ZAR who have good insights into South Africa likely remain somewhat hesitant to rush into selling positions of the currency pair. However the ability of the USD/ZAR to correlate to the broad Forex market is a solid sign. If resistance levels above can prove durable and the 18.40000 to 18.50000 marks are not challenged significantly in the near term this may be a signal that financial institutions are open to the potential of additional selling. The 18.10000 level has proven difficult to penetrate lower in November and December.
If the USD/ZAR can maintain its lower values this week as trading remains lighter than normal due to the New Year’s holiday, it may be another good sign for full market action which will start to develop on the 8th of December. A break below 18.25000 and sustained trading below the 18.20000 ratio would be an optimistic signal for bearish traders of the USD/ZAR.
However, USD/ZAR speculators need to remain alert to potential domestic issues in South Africa which could cause momentary volatility. Day traders should not get overly ambitious regarding outlooks regarding the USD/ZAR and remain vigilant about short-term dynamics. If the USD/ZAR can break lower and global risk sentiment continues to foster a weak USD outlook, perhaps the USD/ZAR could begin to challenge values seen in July of 2023.
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