As the USD/ZAR began trading this morning fresh depths were seen and the currency pair is experiencing speculative fluctuations as the lows remain in sight.
- The USD/ZAR is near the 18.41890 ratio as of this writing, but as the day begun the currency pair did touch a depth around the 18.35455 mark.
- The USD/ZAR is correlating to the broad Forex market as the USD has been hit by a wave of speculative selling as many global financial institutions seem to be practicing a mid-term outlook which includes a more dovish U.S Federal Reserve.
However this doesn’t mean that financial institutions are correct yet and traders should be careful if they are speculating on the USD/ZAR, particularly because there are other issues which will serve as impetus for the currency pair. The lower depths this morning in the USD/ZAR hit levels not seen since the 2nd of January. While the downside momentum is strong in the currency pair and lower depths were seen in the USD/ZAR in December of 2023, speculative caution may serve as a solid precaution.
South African Election Two and a Half Weeks Away
A stronger South African Rand will certainly be welcome by citizens and enterprises in the nation, but a glance at a one year technical chart shows the currency pair has reacted to the lower depths now in sight and has frequently reversed higher. Yes, if USD centric weakness continues this will certainly help the USD/ZAR remain within its lower ratios. But two shadows however should be kept in mind by USD/ZAR traders.
Tuesday and Wednesday will produce important inflation data from the U.S via the PPI and CPI numbers. And the South African election is drawing closer every moment, the vote is on the 29th of May and financial institutions may begin to show signs of nervousness as they contemplate potential unknowns.
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USD/ZAR Support and Betting on the Trend
While it is never safe to stand in front of a strong trend and fight against its momentum, traders are urged to use solid risk management if they insist on pursuing additional downside below depths of 18.40000. After hitting this morning’s lows the USD/ZAR once again reversed higher and its battle within the 18.41000 to 18.43000 ratios may prove to be an interesting landscape for quick hitting adventures.
- If the U.S inflation reading tomorrow comes in weaker than expected this could fuel additional bearishness in the USD/ZAR.
- However if the Producer Price Index comes in stronger, this could spur on some buying of the USD/ZAR.
- An outcome that essentially matches expectations will set the path for Wednesday’s ultra-important Consumer Price Index from the U.S which will also be watched carefully.
USD/ZAR Short Term Outlook:
Current Resistance: 18.43500
Current Support: 18.41100
High Target: 18.46400
Low Target: 18.38910
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