The USD/ZAR has provided day traders plenty of chances to consider stepping into its price action which has demonstrated significant movement the past couple of weeks. Recent trading in the USD/ZAR continues to correlate with the broad Forex market and clearly indicates the South African Rand is functioning within a USD centric framework. The value of the USD/ZAR at this moment has returned to a known but cautious price range as financial institutions remain skeptical of current sentiment which still presents itself in a fragile manner.
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USDZAR Range Masks Tension Beneath the Surface
Price volatility can be certainly described as having taken place in the USD/ZAR the past handful of trading sessions, but the current conditions in the currency pair mirror action in the broad Forex market. Higher ratios seen late last week and the strong return to lower values the past day and a half, and back to prices which were seen only a couple of weeks ago has kept the USD/ZAR in a well-practiced speculative zone.
However, due to the velocity frequently on display and tendencies to produce sudden reversals the USD/ZAR remains challenging for all day traders. Financial institutions are clearly trying to manage their outlooks over the mid-term based on quickly developing geo-political tensions (mostly from the Middle East) and this is causing choppiness. The higher elements of the USD/ZAR seen last Friday and sudden move lower are being affected also by central bank considerations from South Africa and the U.S, which has added to the drama of the currency pair.
Middle East Tensions and Central Bank Signals Shape USDZAR
The USD/ZAR is now close to the 17.49600 level having been able to come off of highs which saw the 17.98700 mark momentarily sparked last Friday followed by swift and strong selling. The currency pair has returned to a realm it traversed in the middle of July. While noise from the Middle East has lessened for the moment, impetus is being generated via behavioral sentiment shifts regarding the USD which has taken on a weaker stance since early yesterday.
Yet even though the downturn in the USD/ZAR from higher terrain has been significant, it is important to note that the currency pair has not been able to break free from a range that could still be considered rather cautious by financial institutions. Meaning that the USD/ZAR is still within a value band that would allow big players to become buyers quickly and create higher price ratios rather fast. While the downside may look tempting to speculators, there is a distrust about current conditions due to the frequently changing of rhetoric between the U.S White House and Iran.
Why Traders Distrust the Current USDZAR Conditions
Day traders may be tempted to look at the USD/ZAR and technical values seen in early July and believe the 17.40000 target area is a worthwhile wager, but it may prove overly ambitious. Speculators are also reminded that the wide spread within the USD/ZAR allows for the perception of volatile price changes. When in fact the reason for sudden moves higher and lower often are because of volume that is lacking, thus creating a window for the feeling of sudden ruptures when too much leverage is being used by a retail trader. Impetus via a more optimistic broad market approach may be appealing for some traders at this moment, but the past couple of months are littered with dynamic shifts in sentiment which have led to the rather sweeping reversals and a wide technical price range displayed in the USD/ZAR.
Sentiment Shifts Keep USDZAR Day Trading Volatile
Last night it has been reported that there was another attack by Iran on a U.S military base in Kuwait. While the broad Forex market has not reacted in a massive manner to the news as of yet today, the return of North American financial institutions and potential response from President Trump in the coming hours could spur on some volatility. The USD/ZAR will remain correlated in a healthy manner it appears to the broad Forex market for better and worse, depending on the outcome wanted by day traders per their chosen directions. Current conditions allow for the consideration that the USD/ZAR remains vulnerable to risk events.
Current Events Could Quickly Jolt USDZAR Price Action
Day traders must remain vigilant. The broad Forex market including the USD/ZAR has produced a flurry of activity the past few trading sessions which have seen a wide price realm traversed. Trades are advised not to get married to a position and feel as if they are obligated to be stubborn even if the trade proves painful. Fast conditions merit the practice of secure risk management and immediate responses if newsworthy events manifest and cause more volatile price action.
USDZAR Short-Term Levels Traders Are Watching Now
Current Resistance: 17.49950
Current Support: 17.48800
High Target: 17.56700
Low Target: 17.46500
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