- It appears that the month of November will start with the USD/ZAR within the higher elements of its month long range.
- Incremental bullishness has been seen throughout October in the USD/ZAR.
- This move upwards in the currency pair has correlated to the broad Forex market that has seen a strong amount of USD centric strength emerge since late September.
The coming days and weeks are likely to see a vast amount of price volatility in the USD/ZAR. Financial institutions will react to nervous sentiment and a lack of clarity in the first week of November, and then try to find equilibrium if some form of a tranquil outlook is delivered. Not only are U.S jobs numbers starting the show on the 1st of November, but the U.S Presidential election is on the 5th and will be followed by the Fed’s FOMC Meeting on the 7th. Volatility should be expected by day traders.
Fun and Games Until Your Trading Account Gets Blown Out
While the USD/ZAR via a one month chart looks like a steady bullish ride north, a three month chart of the currency pair tells a different story. When combined with the ability of the USD to gain against almost all other major currencies the past handful of weeks, the weakness of the South African Rand and its climb from nearly 17.04000 on the 30th of September to the current price value of 17.72400 makes sense. Traders who are nervous the USD/ZAR has gained via the influence of bad South African sentiment in financial institutions should remain calm, because this is not the reason the currency pair has lost ground.
However, for those who believe the USD/ZAR is overbought and want to sell the currency pair, a deep breath is recommended too and a more patient viewpoint should be practiced. Nervous behavioral sentiment in the coming days is not about to disappear. Price velocity in the USD/ZAR will become dangerous on Tuesday and Wednesday of next week as the U.S election results are announced. There is a stark difference via perspectives in financial institutions regarding the presidential candidates and depending on who wins, traders should expect price reactions. The speed of reversals which will be seen in the USD/ZAR. If cautious trading is not used, simply put - traders should expect to lose a lot of money if their chosen direction is not attained and risk management is not used.
U.S Federal Reserve Should Not Be Forgotten
On top of the reactions coming from financial institutions because of the U.S election results, the U.S Federal Reserve will announce its interest rate decision next Thursday. The Fed may be in a position to cut the Federal Funds Rate by another 0.25.
- However, if jobs data is stronger than anticipated this coming Friday this could derail the Fed’s dovish intentions, particularly if the U.S central bank get nervous due to the results of the U.S election too.
- Day traders who have bet against the bullish streak in the USD the past handful of weeks because they believe the USD/ZAR should go lower, need to remain patient, but they also need to acknowledge a solid amount risk adverse trading is taking place and this may keep the USD stronger over the near-term and throughout the first week of November.
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USD/ZAR Outlook for November 2024:
Speculative price range for USD/ZAR is 17.25000 to 18.35000
This November may prove to be very volatile for the USD/ZAR. Day traders without deep pockets should try to follow the trends being created by large financial institutions if they can be sustained for a few days. Volatility in the USD/ZAR should start to lessen a couple of days after the U.S Fed’s interest rate policy decision. If the Fed cuts its interest rate, this may help the USD/ZAR selloff a bit, but because of the potential of heightened nervousness caused by the U.S elections results, selling of the USD may not gather significant strength quickly.
The first week of November could prove very dangerous and traders need to be mindful of trends that could quickly reverse. If financial institutions begin to feel calm with the U.S election results and the Fed expresses a cautious dovish approach a return to lower values could be seen in the USD/ZAR. If the opposite occurs and the Fed rhetoric becomes ‘let’s wait and see’, the USD/ZAR could test new highs not seen since early August and November may see more nervous bullishness in the currency pair.
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