The USD/ZAR is trading near the 18.39000 ratio as of this writing, which is approaching important one month support levels as financial institutions have leaned into a more optimistic viewpoint cautiously.
The USD/ZAR is occupying terrain that technical traders will find intriguing because it is near the 18.36000 level which is viewed as support. The ability of the USD/ZAR to trade lower the past two weeks is noteworthy, on the 3rd of February the currency pair had climbed slightly above the 19.00000 mark. The upwards momentum was propelled via tariff fears caused by the Trump administration late January, but also because the U.S is taking a tougher stance towards South Africa’s politics.
However, in the past two weeks calmer heads have prevailed and financial institutions have renewed some optimism with the belief negotiations will spur positive outcomes. The USD/ZAR is now traversing values that need to be interpreted via existing behavioral sentiment by day traders as they consider what large players will now undertake. Speculators need to pay attention to wide spreads via bids and asks in the USD/ZAR which can cause confusion because of their speed.
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Navigating USD/ZAR Technical Charts and Perceptions
A one month chart shows the 18.36000 to 18.30000 levels as curious support levels. A three month chart shows the USD/ZAR is now touching values just before the Christmas holiday. While the downturn the past handful of trading days is positive for the South African Rand, the currency is still within the upper limits of its value range when a six month technical chart is looked upon.
Day traders should not get overly ambitious about the USD/ZAR creating a stampede lower. Before further sustained price action is achieved via selling the USD/ZAR has to certainly show it can break below the 18.30000 mark. Traders targeting lower depths based on the near-term trend cannot be blamed, but they should also understand that sentiment surrounding the USD/ZAR remains rather fragile. While stronger selling has been seen the past two weeks, financial institutions still need to see more evidence that the South African government’s leadership will be able to navigate affairs with the new U.S White House administration.
Risk Taking and USD/ZAR Sentiment Near-Term
The U.S released inflation data last week which was a bit stronger than forecasted, but the USD/ZAR continued to see selling. This likely shows that the downwards momentum in the USD/ZAR is being sparked by USD centric selling which believe the currency had been overbought globally leading up to the bedlam sparked on the 3rd of February.
- A viable spot to look for further selling in the USD/ZAR are simple targets like 18.35000 to 18.34000 by day traders looking for momentum to carry the currency pair lower near-term.
- Traders should remain cautious under the present conditions because sudden rhetoric from the Trump administration could still cause surprises.
- Resistance above the 18.40000 should also be monitored near-term, if it holds this could be a positive signal for those with bearish instincts.
USD/ZAR Short Term Outlook:
Current Resistance: 18.39550
Current Support: 18.35350
High Target: 18.41400
Low Target: 18.33200
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