USD/ZAR continued to trend lower and is now touching levels last seen in the first week of May; interesting support levels below now appear speculatively attractive.

The USD/ZAR it has lower strength because the currency pair, much to the surprise of many, correlated with the broad forex market. USD/ZAR is trading near 18.23100 at the time of writing, with typical rapid changes in value. USD/ZAR speculators should note that there is a bank holiday in the US today, which means trading volumes will be lower than usual.

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The downtrend in USD/ZAR started like most other major currency pairs on the 1stHoly June. Behavioral sentiment was relatively strong based on US beliefs Federal Reserve System would not raise interest rates in June, which was confirmed last Wednesday when the Fed officially took a break. However, the US Federal Reserve has warned that it may still raise the federal funds rate at the end of July. Last Friday saw a low of nearly 18.13360.

Traders intending to push lower in USD/ZAR are likely to view the 18.20000 level below as a technically interesting price in the short term. The last time USD/ZAR traded below 18.20000 was in mid-April, when the pair mostly traded between 18.00000 and 18.25000 with momentary outliers providing volatility.

The ability to move lower in USD/ZAR and correlate with the broad market is a healthy sign for the South African Rand. However, the political concerns and shadows hanging over South Africa did not disappear; which means USD/ZAR may start to seep into trading results. However, USD/ZAR’s downside strength over the past few weeks has come on the back of the notion that the US Fed may be nearing the end of a rate hike cycle that has been strong for almost a year.

  • The drop in USD/ZAR is not accidental and it is a question of when financial institutions will start to believe that the currency pair has been oversold.
  • Certainly, USD/ZAR traded in the 18.00000 to 18.25000 price range in a rather choppy but sustained fashion for the first few weeks of April. However, volatility was evident and risk management was essential then and continues to be to avoid sudden swings.
  • Day traders should not be overly ambitious and be willing to pay off quick trades using take profit targets, stop losses are also highly encouraged.
  • Finding fast price speed today can be difficult due to the US bank holiday.

Current Resistance: 18.27900

Current support: 18.22100

High Aim: 18.35200

Low Target: 18.15600


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