USD/ZAR Tests 16.00 as CPI and Fed Risk Drive Volatility

The market seen some slight upside early this morning as financial institutions prepare for full liquidity in the broad Forex market. The absence of U.S banks from trading yesterday led to a cautious Monday while a long holiday weekend within North America likely allowed for nervous sentiment to simmer as traders brace for the global markets to gyrate, this as the long summer slumber has now officially ended. Speculators of the USD/ZAR have to decide whether the lower terrain the currency pair is traversing is going to hold and if it can go longer.

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USD/ZAR Awaits US CPI and Fed Decision as Oil Rises

The USD/ZAR is trading within a tentative marketplace early today as it awaits the return of U.S and Canadian financial institutions in the coming hours, this as the price of WTI Crude Oil has bolted up again following another chaotic weekend of saber-rattling in the Middle East. While it may be east to disregard inflation concerns for technical traders who do not monitor economic data, the fact is that concerns regarding higher energy costs and interest rates from the U.S play a critical role in Forex, including the USD/ZAR. The U.S will publish CPI numbers on Friday which will be followed by the Fed’s FOMC rate decision next Friday. The question for day traders – technical and fundamental ones’ – is what outlooks have already been traded into the USD as Forex awaits these two big risk events.

USD/ZAR Tests 16.00 as Volatility and Wide Spreads Persist

The USD/ZAR is near the 16.03700 ratio as of this writing depending on the bids and asks. The wide spread being seen is also displaying signs of early volatility as financial institutions are bracing ahead of even bigger volumes developing in the coming hours. The USD/ZAR did traverse the 15.91000 mark and lower late last week, this as intraday reversals flourished and made it difficult for traders not using entry orders to receive a trustworthy price fill.

The USD/ZAR around the 16.00000 is certainly testing a key barometer, but is within realms seen from late January until late February of this year. Risk adverse sentiment may be the spoken mantra by many analysts today and near-term, this as the perception that financial institutions may become more nervous about risks that are shadowing. Thus, until the middle of next week, the USD/ZAR will not only correlate to the broad Forex market as the U.S Federal Reserve is going to discuss the Federal Reserves Rate, but the currency pair is likely to experience choppiness until there is more clarity regarding outlook.

EURUSD Chart by TradingView

Oversold USD/ZAR Risks a Rebound as Geopolitical Tensions Rise

Instead of hearing calming words from the U.S White House this weekend, it can be said that financial institutions heard more rhetoric but about ‘what will happen when’ from the Trump administration. President Trump spoke about lower energy costs to come when the Iranian war is won. Yet, Iran also amplified their rhetoric by saying they would pursue a more aggressive stance in the Hormuz Strait. These words will not create tranquility among large traders who fear inflation is becoming more sticky and wonder how it will effect USD centric notions, including the USD/ZAR. While the bearish trend in the currency pair has been solid, near-term considerations may present technical opportunities to seek thoughts about oversold price levels in the USD/ZAR.

USD/ZAR Price Chart

North American Liquidity Could Drive the Next USD/ZAR Move

Conditions in the USD/ZAR are compelling as its traverses near important lower realms and showed the ability to move to steeper depths late last week. Financial institutions clearly have signaled they believe the South African Rand can get strong and the USD/ZAR can move lower. But temporary caution has shown some power as Forex volumes have increased the past handful of hours and now impetus will come from larger North American transactions entering the market that have had a nervous weekend to contemplate their outlooks.

USD/ZAR Trading Outlook: Expect Choppy, Short-Term Price Action

Technically the USD/ZAR offers wagering opportunities that will see bursts of value demonstrated near-term, this as equilibrium is sought while the lower realms are tested. Quick hitting trading techniques may be the best option for many speculators as momentum generated may remain influenced by conflicting sentiment. The thought of lower values may feel attractive to traders, but nervousness in the broad market may create headwinds.

USD/ZAR Short Term Outlook:

Current Resistance: 16.04900

Current Support: 16.03100

High Target: 16.09850

Low Target: 16.00100

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