The combination of domestic problems in South Africa and a U.S. central bank which is hawkish is making the value of the USD/ZAR suffer upwards.
The value of the USD/ZAR as of this writing is nearly 19.67000 this morning. Traders pursuing the currency pair today need to be aware that volumes in Forex worldwide will be much lighter than normal because many European nations and the U.S. have holidays today. The USD/ZAR is lingering within the higher realms of record values, this even after the South African Reserve Bank raised interest rates by another 0.50% on Thursday to try and fight inflation.
The ability of the USD/ZAR to not only break 19.00000 on the 11th of May and sustain the values above may have come as a shock to ordinary folks outside of South Africa who watch the Rand. However, inside South Africa most citizens were not surprised and the run higher since breaking this level is unfortunately seen as a precursor to what may develop. The 20.00000 level is the obvious next psychological barrier that is being targeted.
However, speculators who are day traders cannot aim for the 20.00000 mark. They must keep their ambitions and visions of higher values in check and understand the move upward in the USD/ZAR is not likely to happen in one day. No, the move higher is a long-term ride, one that will continue until the people and government of South Africa make large changes. Electrical supply problems are growing worse and cutting the production capacity of businesses. GDP continues to suffer in South Africa and financial institutions seemingly have little confidence in the capability of the USD/ZAR to develop a sustained downward trend.
- The U.S. will see the CB Consumer Confidence reading tomorrow and job numbers on Friday of this week.
- The Federal Reserve continues to sound hawkish and some investors believe additional interest rate hikes from the U.S. central bank may be on the horizon. Inflation remains a concern.
Day traders cannot bet on a one-way avenue upward blindly. Certainly, the USD/ZAR could trade lower in the coming day, weeks,s and months. Traders must use strict risk management. The USD/ZAR is not only rising because of concerns regarding the mismanagement of South African infrastructure but because the U.S. Federal Reserve is also in an aggressive stance.
The combination of domestic problems in South Africa and a U.S. central bank which is hawkish is making the value of the USD/ZAR suffer upwards. Again, trading volumes today will be light and speculators must be ready for bursts of volatility. Traders are advised to look for quick-hitting results in the short and near-term as behavioral sentiment rules the USD/ZAR landscape.
Current Resistance: 19.67900
Current Support: 19.65100
High Target: 19.75200
Low Target: 19.60300
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