The South African Rand has seen another month of very solid bearish momentum continue in December, as the New Year gets ready to start speculators will wonder if the trend can remain strong.
The USD/ZAR is around the 16.62885 ratio as of this writing. A wide spread is being seen across trading platforms and most financial institutions will refrain from igniting new positions until the New Year’s holiday is complete. The month of December has produced a solid bearish trajectory for the USD/ZAR and begun to get the attention of global investors.
On December the 1st the USD/ZAR was around 17.15000. On the first of November the currency pair was near 17.35000 and did see a high of 17.58350 approximately on the 5th of that month. The ability of the USD/ZAR to cascade lower and produce velocity as it makes support levels look vulnerable has been noteworthy.
Narratives True or False
While some argue about the reasons for an emboldened move to long-term lows by the USD/ZAR, it must be pointed out that the South African Rand is not the only emerging market currency that has shown solid strength. Yet, you might have heard the thinking that because precious metals are doing well that this has helped the ZAR. While it certainly cannot hurt the strength of the ZAR, there is more to the story.
South Africa has done a good job of starting to become more transparent regarding corruption and spending irregularities from various sectors in the nation. Also the coalition government which has been in power for a year and half continues to produce positive sentiment regarding investors who are participating in South African bonds. And then there is the ‘little’ push that a weaker USD centric stance has delivered. Having broken below the 17.00000 level on the 10th of December in the aftermath of the U.S Federal Reserve interest rate cut and FOMC Statement is not coincidental.
A New Month and New Year
The USD/ZAR was trading around 18.62000 at this time last year. Let’s remember the past week of trading and next week of Forex needs to be treated suspiciously by speculators, but the results are quite convincing when long-term charts are viewed regarding sentiment.
- The bearish trend of the USD/ZAR has been forceful and since sustaining a move below 17.00000 in the second week of December, financial institutions have reacted with more selling.
- A range of 16.60000 to 16.70000 thereabouts may remain a sticky ground over the next handful of days as the New Year’s holiday runs its course, but the trend lower remains intriguing.
- Values from January 2023 are now being touched and a look beyond into August of 2022 shows the USD/ZAR touching lower depths.
- Can lows of 16.20000 be challenged in the weeks ahead, or will that be seen as oversold by financial institutions?
USD/ZAR Outlook for January 2026:
Speculative price range for USD/ZAR is 16.15000 to 16.93000
Volatility and the potential of reversals higher have not suddenly left the USD/ZAR. All it takes is one moment of stupidity from bad policy to scare financial institutions. The stupidity it should be pointed out could come from outside – like an ill-timed spat of rhetoric from the U.S White House. Or domestically – like a bad policy decision which effects businesses ability to practice free enterprise and not suffer from cumbersome regulations.
However, the past handful of months as a reference has shown positive impetus building in South Africa. This opens the door to the possibility the USD/ZAR can continue to correlate to the broad Forex market. If a combination of weaker USD centric price action persists the USD/ZAR could continue to incrementally push lower. Day traders must not get over confident and remember to use adequate risk management. If the USD/ZAR breaks below 16.60000, shows a challenge of 16.50000 is possible and is sustained there may be room to traverse lower. Moves higher must be watched out for too, but as long as behavioral sentiment remains stable, moves higher may be a way to sell the USD/ZAR and use quick hitting targets below.