As of this morning the USD/ZAR is near the 16.22850 ratio with a wide spread being displayed as broad Forex market values fluctuate rapidly in a rather light trading environment.
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On Thursday of last week, the USD/ZAR was around the 16.39900 vicinity when the U.S jobs numbers showed less than expected hiring. The trigger pulled via the data ignited some USD selling in the broad markets and the USD/ZAR was able to produce a return to its known lower realms. Before the U.S data the USD/ZAR had been showing signs of potential financial institution bearishness in the currency pair.
USD centric strength which has been solid across the broad Forex market has started to show signs of being fragile, but traders need to remember volumes are lighter than normal in the marketplace because of the long U.S holiday weekend. Large players certainly have been missing in mass the past couple of sessions, and today’s trading may remain light. The USD/ZAR which is back to a known lower range will get tested via sentiment in the near-term.
Changing Notions about Global Inflation
Fuel prices globally have been rising the past couple of months due to the impact on Crude Oil values, but as the Iranian situation with the U.S continues to show signs of calm, the price of WTI Crude Oil has dropped below 69.00 USD as of this morning. The lower fuel costs will help nervous sentiment regarding inflation, and this will also impact the USD/ZAR. Lower inflation in South Africa should help the Rand remain in its stronger stance which has been displayed over the long-term.
The 16.20000 support level could prove an interesting wagering ground over the next couple of days. Financial institution may continue to believe over the mid-term the USD/ZAR can track lower. However day traders should remain cautious about over reaching for targets that are too far away considering the risk of volatility via intraday choppiness.
Near-Term Volumes and Return to Full Markets
Lighter than normal trading volumes today could lead to potentially volatile conditions. Forex will likely not see full market pricing until Tuesday and Wednesday of this week.
Last week’s job numbers results were intriguing from the U.S, and coupled with cheaper energy costs could start to trigger a groundswell of belief the Federal Reserve may not have to raise interest rates in the mid-term
The USD/ZAR may have room to traverse lower, but a lack of full volumes may cause some sideways cautious price action near-term.
When financial houses are working at larger capacity the USD/ZAR may find the 16.20000 to 16.16000 realms a testing ground.
But again, day traders should remain realistic with their wagers and not overreach.
Also, risk appetite will have to be a bit stronger in U.S equity markets to maintain steady or decreasing U.S Treasury yields for the USD to show more weakness.
USD/ZAR Short Term Outlook:
Current Resistance: 16.23100
Current Support: 16.21020
High Target: 16.23800
Low Target: 16.19600
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