The USD/ZAR has traversed a rather volatile consolidated value band the past handful of days, this morning’s early action has returned the currency pair to an important inflection level slight below 17.20000.
In early trading this morning the USD/ZAR has opened with lower price action and the 17.20000 level is being challenged, the currency pair continues to show the ability to create bearish momentum but it hasn’t come easily for day traders. Today’s Forex action in the USD/ZAR began with a gap lower, this after it went into the weekend near the 17.23000 ratio.
Importantly, although the USD/ZAR started last week’s trading 17.35000 vicinity a relatively strong selloff occurred taking the currency pair towards the 17.18000 area momentarily last Tuesday. However, that was followed by a strong reversal higher and the USD/ZAR was near a high of 17.48700 by Wednesday. The USD/ZAR was near the 17.35000 ratio on Friday, before the U.S Consumer Price Index reports were released and sold off on the lower than expected inflation results.
17.20000 and Speculative Trading Results for the USD/ZAR
The 17.20000 which is now being fought over in the USD/ZAR appears to be an important inflection point for financial institutions dealing with the South African Rand. From October the 1st to the 10th the USD/ZAR did manage to fight below this important level, sometimes challenging marks below the 17.18000 ratio. Day traders need to understand the USD/ZAR often has a large spread between bids and asks, so entry orders are crucial for them to receive price fills that are anticipated.
If the USD/ZAR can maintain value around the 17.19000 early today it will create an interesting question for financial institutions. The U.S Fed is expected to lower its Federal Funds Rate by 25 basis points on Wednesday. This interest rate cut has been traded into the value of the USD/ZAR already. However, the remarks by Fed Chairman Powell on Wednesday will cause volatility. Will financial institutions venture forward with more bearish outlooks for the USD/ZAR before the Fed announcements?
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Fed Outlook and Near-Term Speculation in the USD/ZAR
Outlook is important for financial institutions regarding interest rates mid-term. If Powell hints at another interest rate cut in December this could keep the USD/ZAR within its lower bands and perhaps ignite a test of lows seen in late September and early October of last year when the 17.10000 to 17.01000 levels were tested.
- However, day traders need to stay realistic, they should not bet on targets that are too ambitious compared to the size of their trading accounts.
- Looking for quick hitting trades may work best.
- Also, it will be important to remember that USD/ZAR trading before Wednesday will be speculative, as financial institutions also try to figure out how they should be positioned before the Federal Reserve decision.
USD/ZAR Short Term Outlook:
Current Resistance: 17.21400
Current Support: 17.19200
High Target: 17.24980
Low Target: 17.17400
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