The USD/ZAR has jumped above the 18.0000 level in early trading this morning, but after the gap upwards the currency pair has been able to produce a bit more calm.
As of this writing the USD/ZAR is near the 18.04200 vicinity in fast trading that has created upwards momentum and a wide spread. Day traders thinking about pursuing the USD/ZAR short-term will have to use strict risk taking tactics, because there is a large amount of sentiment which is shifting quickly. Although the USD/ZAR certainly sparked higher this morning, the currency pair has been rather calm the past few hours.
Friday’s close around the 17.97100 ratio and this morning’s opening gap higher to nearly 18.10000 should not have caught traders by surprise. Anyone who went into the past weekend with an open position should have acknowledged that risk events because of a potential escalation in Middle East was a possibility. South Africa however does not import a large amount of Crude Oil from Iran, this should help stabilize nervous sentiment.
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Middle East Tensions and Near-Term Notions
However, even though South Africa doesn’t use a big amount of Iranian oil, financial institutions will remain rather anxious about global scenarios. The USD/ZAR has correlated to the broad markets and risk adverse buying of the USD this morning early was rather predictable. The question for Forex and global assets short and near-term is what will happen next in the Middle East.
If Iran continues to produce Crude Oil and supply appears solid, this will calm global investors. As U.S institutions enter the marketplace over the next couple of hours this will give an additional clue regarding existing sentiment.
It is certainly a wager to believe optimistically that calm will prevail and that tensions will not escalate. A day trader needs to gauge their reasoning regarding why they believe different scenarios will be determined. And, day traders need to remember it is large financial institutions that are moving the USD/ZAR and all other Forex. The ability of the USD/ZAR to move lower after reaching a high early this morning near 18.10000 and now have 18.02000 in sight is intriguing.
Looking for Lower Movement and a Known Range
The USD/ZAR had been trading below the 18.00000 for nearly a month with rather steady price realms seen. The move above 18.00000 again the middle of last week should have been expected based on the amount of nervous tension in Forex and unknowns regarding outcomes in the Middle East.
Yet, the ability to stay within sight of the 18.00000 level even after U.S participation in Iran yesterday is of interest.
Speculators who have the emotional strength to wager on the USD/ZAR, and look for short-term lower momentum when they believe the currency pair has traversed too high, may find an opportunity to profit.
Traders should not get over confident, they need risk management like stop losses working to protect themselves against potential surprises.
USD/ZAR Short Term Outlook:
Current Resistance: 18.06000
Current Support: 18.03000
High Target: 18.08100
Low Target: 17.99970
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