The USD/ZAR has fallen below the 19.00000 in early trading this morning, this as a moment of tranquility has been delivered within the broad global markets, but traders shouldn’t get too comfortable.
The USD/ZAR was traversing within sight of the 20.00000 realm on Wednesday of last week, when it traded near the 19.95000 vicinity for a moment as global market tensions boiled and financial institutions demonstrated widespread unease. However, the past couple of trading days have seen some degree of calm return and the USD/ZAR has also ebbed lower. This morning the currency pair is trading near the 18.90000 ratio as of this writing.
Traders should not get too comfortable quite yet, more choppiness is likely to be produced in the global markets and this will affect the USD/ZAR. But when another stick of dynamite is going to be thrown into the Forex market is not exactly known. The ability of the USD/ZAR to break below the 19.00000 level this morning is a positive sign.
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Global Tensions and Domestic Concerns in South Africa
As the USD/ZAR trades below the 19.00000 level it is not time for people to celebrate regarding the success of the South African Rand to trade lower. The USD/ZAR is still in higher territory and may still be looked at as being in overbought realms by many speculators and financial institutions. The Trump tariffs and sanctions however, still shadow the markets, and fiscal concerns mire South African politics and the ability to run the nation effectively.
Financial institutions have reasons to remain uneasy, and speculators who have wagered on downside since late last week while making a reasonably sound bet need to remain realistic regarding their targets. The USD/ZAR is not likely to return to the 18.40000 vicinity near-term. This is also a holiday week and financial institutions will start to trade less by Thursday before shuttering on Friday.
Volumes and Tariff Winds Remain Problematic
The past two weeks of trading in Forex, including the USD/ZAR, have seen a year’s worth of volatility. Traders have been reminded – in case they forgot – to use conservative leverage and solid risk management. While the USD/ZAR trades near the 18.90000 vicinity, looking for lower values may seem logical, but looking for more than the 18.87000 ratio may be a step too far for traders without deep pockets.
- Having the ability to withstand sudden bursts of price action remains a key feature for speculators.
- President Trump is set to discuss more tariff decisions today and this could help create more bearishness in the USD/ZAR if his words are seen as encouraging for the short and near-term.
- If Trump sounds like he is in a punitive mood however, things could get rough again for the USD/ZAR and produce upwards price action.
- A lot of risk premium has been priced into the USD/ZAR which leads to the assumption it can trade lower but speculators should keep their wagering ambitions realistic.
USD/ZAR Short Term Outlook:
Current Resistance: 18.92600
Current Support: 18.88100
High Target: 18.95800
Low Target: 18.80500
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