The USD/ZAR has correlated to a sea of nervousness in Forex early today and is around the 16.67000 realm as of this writing. Day traders are urged to compare this written price to the values on their screens as they decide on which direction they want to pursue. Forex and the USD/ZAR have become choppy again and a lot of this has to do with nervousness being generated regarding the Middle East conflict. Wide spreads are dominating and prices are moving fast.
The USD/ZAR early this morning did touch highs around the 16.78000 vicinity, and perhaps this is a an area that financial institutions believe could be in the sights to become sustained should anxiousness turn into a bad reality in the near-term. USD centric strength has been strong the past couple of trading sessions and this weekend’s developing news has not eased sentiment.
Sentiment Versus Technical Perceptions
Speculators who are stuck solely on technical perspectives may find the choppiness to their liking with the USD/ZAR, but their interpretations of price action may not be 100% correct. Behavioral sentiment is a large factor in Forex for the moment along with shifting fundamental concerns. The potential of energy prices remains higher and causing global inflation are now a legitimate worry and global central banks will have to consider interest rate policy changes. But at some point, nervousness about higher energy costs will also become tempered.
The USD/ZAR has been within a solid bearish trend over the long haul, but recent trading has shown it is not immune to USD centric shifts. The broad Forex market has produced volatility and this is likely going to remain a feature of trading throughout this week. Financial institutions are likely changing their outlooks based on the prospects of higher costs, meaning the U.S Fed could become more hawkish and actually consider raising interest rates, this if no clarity regarding the Iran war comes into view.
South African Rand and Domestic Issues
The South African Rand is still within the stronger part of its long-term values. The currency has surprised some citizens in South African by incrementally showing strength over the past handful of months.
Political questions as always are in the mindsets of domestic financial institutions, but for the moment concern remain only an irritant and not the main driver of near-term values.
Yes, if the nation was able to eliminate fiscal concerns, and fight corruption more effectively the South African Rand would be even stronger.
However, for the moment the USD/ZAR remains within a realm that is correlating to the broad Forex market heavily.
It is all about shifting sentiment. Taking advantage of the swirling reactions in the broad markets and betting on USD/ZAR direction is a tactic, the question is what financial institutions will think near-term and how do they position for the mid-term at the same time?
USD/ZAR Short Term Outlook:
Current Resistance: 16.68100
Current Support: 16.64400
High Target: 16.72300
Low Target: 16.59900