The USD/ZAR will begin the month of August within a technical middle ground per its one month chart and traders should be ready for choppy conditions to emerge.
The USD/ZAR will open its trading for the month of August near the 16.60000 level. This value is significant distance from the highs created on the 14th of July when the USD/ZAR currency pair attained a high of nearly 17.31000. While this water mark was not toppled again, on the 15th and 21st of July the USD/ZAR did show upwards momentum again. However, by the 28th of July just as the shadows of the U.S Federal Reserve’s interest rate hike pronouncement rattled, the USD/ZAR was did reach a momentary high of 16.82000 approximately after falling to nearly 16.61000 a little beforehand.
Significantly for technical traders the USD/ZAR did touch a low of nearly 16.48500 on the 28th of July. On Friday before going into this weekend the USD/ZAR did touch the 16.38500 ratio before a reversal higher of nearly 16.69000 was exhibited. The value level of 16.38500 was last touched on the 5th of July before Friday’s early price action. As the month of August begins, traders have an intriguing speculative decision to make regarding the equilibrium of the USD/ZAR near term.
U.S Federal Reserve Raises Interest Rate but its Outlook is Unclear
Fundamentally the USD/ZAR currency pair has seen a great deal of bullish momentum caused by the hawkish interest rate policy of the U.S Federal Reserve. On the 29th of June the USD/ZAR was trading near the 16.20000 juncture. The ability of the USD/ZAR to trade within a strong bullish trend has reflected many of the major currencies and its reversal lower late last week also reflects widespread price action in global Forex pairs.
- Support levels of 16.49000 should be watched carefully to see if they become vulnerable.
- Resistance levels near the 16.68000 to 16.74000 may prove important and if broken higher could cause a renewal of nervous buying.
Risk Taking Tactics will be Important for Short Term Traders as Volatility Lurks
The quick decline in value the past couple of days in July and the ability to sweep through support rather easily serves as a warning for speculators. After the highs of mid-July the USD/ZAR has incrementally lowered and the fast conditions seen the last few days may translate into volatility for traders as August trading begins and equilibrium is sought.
Technically support levels should be watched. If they continue to prove vulnerable, traders with quick hitting take profit orders should keep their targets realistic because additional lightning fast reversals higher could occur. This because U.S economic outlook remains unclear and the future actions of the U.S central bank will be debated loudly which could stir behavioral sentiment.
USD/ZAR Outlook for August 2022
Speculative price range for USD/ZAR is 15.89910 to 17.15200.
The trend of the USD/ZAR upwards to start the month of July for the first couple of weeks was rather significant. However after hitting the apex highs not seen since August of 2020, reversals lower did start to happen. Momentum downwards now has the USD/ZAR residing near important support, and if the 16.50000 is broken lower again as August trading begins to get established, this could be a negative signal for the USD/ZAR and mean the 16.40000 to 16.35000 vicinities may be challenged.
A move below the 16.30000 level would be impressive and there does seem to be rather significant support around the 16.20000 to 16.15000 ratios. Traders should not become overly ambitious regarding their short term wagers via selling positions.
A consolidated range of the USD/ZAR within this newly created middle ground would not be a complete surprise during August. A strong move higher might be seen, but the question is if it can be sustained and for how long? Speculators looking for upside price action based on support levels proving durable should also use realistic targets.
Choppy conditions may prove prevalent in the coming weeks; this until financial houses feel comfortable with U.S central bank policy and this may not be easy. The USD/ZAR is likely to test higher values, but resistance near 16.70000 and 16.80000 could prove to be rather durable. A move that challenges 17.00000 again may prove difficult, unless financial markets become nervous globally.
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