Friday’s trading in the USD/ZAR saw the currency pair explore fresh lows as the 17.60000 level was penetrated, but before going into the weekend a reversal higher was sparked.
- The USD/ZAR pair as of this writing is near the 17.84825 ratio with quick changes being displayed on the trading screen.
- However, before a trader gets enticed by the demonstration of rapid price changes, they should know that there is a banking holiday in the U.S today and Forex volumes are quite thin.
- Part of the reason the USD/ZAR is showing fast changing price fluctuations which appear wide is because thin Forex increases the gap between the bid and ask price for currency pairs, including the South African Rand. Price jumps higher are normal on a day like today.
Yes, the USD/ZAR has reversed higher and sustained its price range early this morning. But the reversal upwards has occurred after Friday’s lows produced values of 17.59200 as the U.S was in the midst of presenting inflation data, which confirmed via the PCE Price Index that costs are beginning to show signs of moderation. The lows in the USD/ZAR hovered around the 17.60400 to 17.61500 marks for a little while on Friday, but then the currency pair began to climb upwards as the weekend approached.
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Behavioral Sentiment in the USD/ZAR
Although the USD/ZAR has now held onto short-term highs, speculators should not get overly concerned about these higher values and probably should reconsider fears the currency pair is now going to start challenging the 18.00000 realm again in the near-term. Behavioral sentiment appears to be calm in financial institutions in South African and globally regarding the USD. It is likely the very thin trading that began to occur late on Friday via U.S institutions, which allowed their employees to leave early for the Labor Day weekend and today’s slower volumes are allowing the USD/ZAR to trade higher.
Traders should remain cautious because of the light trading in Forex. Speculators should consider quick hitting targeted trading, but technical charts on a day like today are known to produce lightning fast changes, that make little sense because the thin trading environment often proves volatile if large trades are suddenly being made.
Near-Term is an Opportunity in the USD/ZAR
The higher values in the USD/ZAR now via short-term trading could be considered a selling opportunity, but unfortunately betting on short-term downside momentum to suddenly flourish today is very dangerous. It might take the next couple of days for the USD/ZAR to begin fighting lower. Until full trading volumes return on Tuesday, Forex speculators may be spitting into the wind today and be surprised by poor outcomes.
- The bearish push lower in the USD/ZAR has made sense via behavioral sentiment shifts in South Africa because of the new government over the past couple of months.
- Friday the U.S jobs numbers will be published, and this will be a large mover for the currency pair and traders should understand leading up to the Non-Farm Employment Change things may remain choppy.
USD/ZAR Short Term Outlook:
Current Resistance: 17.87800
Current Support: 17.81900
High Target: 17.91100
Low Target: 17.78800
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