- The USD/ZAR finished May proving it could sustain prices below 18.00000. Whether it will continue to accomplish this feat on a steady basis is a question speculators will need to consider in the coming days and weeks. The ability of the USD/ZAR to penetrate 18.00000 took place around the 20th of May. The ratio has proven a rather impressive battleground in the past week and a half, but lower values have been seen and remain alluring.
- A South African government team consisting of President Ramaphosa and other members did go to the White House a week and a half ago. The outcome of the meeting behind closed doors is not yet clear. Outwardly, per the meeting in the Oval Office with President Trump, dialogue did get tense, but President Ramaphosa remained diplomatic. Financial institutions reacted calmly with the USD/ZAR in the aftermath of the meeting on the 21st of May.
The USD/ZAR started May near highs around 18.71000, its bearish trend the past few weeks has been strong. The correlation of lower momentum in the USD/ZAR with the broad Forex market is real. It appears for the moment that large traders are focused on the weakness the USD is showing and remain comfortable with the political coalition in South Africa.
The USD/ZAR is now traversing territory it saw price action at in the middle of March. Upwards values were seen in the last week of March and spiked early in April when President Trump proclaimed his global sanction policy. However since highs of nearly 19.95000 were touched on the 10th of April, the USD/ZAR has done remarkably well. Financial institutions have obviously become more calm too, and the USD has shown a tendency to lose value. Traders now have to consider longer term charts to gain perspective.
While the downwards trend of the USD/ZAR has been solid, the currency pair is now bouncing up against values it saw in the middle of December. Traders should not only look at six month charts, but also glance seriously at a one year chart to gain a perspective on potential trading grounds for the USD/ZAR.
- Yes, if support proves strong the USD/ZAR could simply bounce along current values and occasionally test resistance above and produce a rather choppy month of June.
- However, if USD weakness continues and financial institutions begin to lean into the notion the U.S Federal Reserve is going to lower interest rates in July, perhaps that will allow for the USD/ZAR to traverse lower.
- The USD/ZAR was near the 17.60000 level in the second week of December. But traders should not get too aggressive if they don’t have deep pockets.
Financial institutions trading the USD/ZAR essentially have two considerations they must use when thinking about outlook. Is USD weakness going to remain an ingredient in global Forex? And is political cohesion going to remain firm in South Africa? There is a sincere possibility that both will prove positive in June and if this occurs further downside in the USD/ZAR may continue.
Certainly there will be reversals higher that must be dealt with by speculators and risk management remains a necessity always. It appear the USD/ZAR has accomplished a solid bearish trajectory which may be able to maintain its lower realms achieved in May. Traders who want to look for more downwards action will need to pay attention to behavioral sentiment in the global markets. If risk appetite remains firm, USD/ZAR and the 17.90000 to 17.75000 ratios will become targets incrementally once again. The low for the USD/ZAR in May was accomplished this past Thursday. Going into June financial institutions will be tested again regarding near and mid-term outlooks.
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