Forex conditions remain nervous early this morning, this as financial institutions are clearly within a wait and see mode The USD/ZAR is correlating to results via other major pairs. The South African Rand lost value on last Thursday and Friday as nervousness escalated, perhaps on the realization the Iranian war is not going to be quickly fixed. The USD continues to act as a safe haven magnet.
While it may be tempting to believe the USD/ZAR cannot go higher based on its rather impressive bearish trend it was able to display for a long duration before the start of the Iranian war, it could prove to be an expensive losing wager if day traders bet against the USD blindly. The USD/ZAR is near the 16.87900 mark with a large spread between bids and asks being demonstrated.
Entry Orders and Wishing Upon a Star
Speculators who are keen on betting on the USD/ZAR need to use entry price orders so they are not hit hard by price fills they do no expect. The speed of the Forex market and wide spreads in all currency pairs highlights the dangers for USD/ZAR traders. Although the currency pair is challenging realms seen on the 9th of March which could be deemed as resistance by some technical traders, a glance at three and six month charts will show we have seen these levels before.
Regarding momentum – which is important to consider for USD/ZAR traders – the last time the currency pair was above its current levels a few months ago was in the midst of a bearish cycle lower. This time around the USD/ZAR is suffering from a bullish cycle clearly caused by the Iranian war and its knock-on effects in the global markets. Betting on the USD/ZAR to suddenly start breaking lower may be wishful thinking in the short and near-term, particularly if the targets are overly ambitious.
Caution and Fundamental Grasp of Sentiment
Behavioral sentiment remains nervous as financial institutions wait for evidence that they can relax. Unfortunately the current situation globally due to the higher costs of Crude Oil prices and potential for escalation via the Middle East crisis is not going to allow near-term sentiment to improve greatly.
Traders who want to bet on reversals lower need to be nimble. New developments continue to be heard and surprises should be expected to rattle nervous markets.
The USD/ZAR moves fast on a regular basis, and now with a war raging that doesn’t look like it will end shortly, volatility should be expected to linger in the short and near-term.
Traders participating in the USD/ZAR need to acknowledge the currency pair is being influenced by a strong dose of anxious considerations.
USD/ZAR Short Term Outlook:
Current Resistance: 16.88100
Current Support: 16.95600
High Target: 16.87200
Low Target: 16.80700