The USD/ZAR as of this morning has continued to display downward capabilities and is trading near the 17.65800 ratio as of this writing.  From the 29^th of September until the 3^rd of October the USD/ZAR currency pair demonstrated an ability to test the 18.10000 ratio. However in the past day and a half the USD/ZAR has begun to trend lower. Yesterday’s highs were seen early near the 17.86000 ratio as lower price action from the day before continued to apply selling pressure.

Support levels from the 23^rd of September now within Sight and Consideration

The spark downward in the USD/ZAR that has emerged is being reflected within the broad Forex market. Behavioral sentiment among financial institutions has seemingly begun to bet that the U.S Federal Reserve is about to be ‘forced’ to become more dovish. Major equity indices have suddenly turned positive with a large amount of buying. It appears there is a suspicion the U.S central bank may raise its interest rate only 0.50% in November.

The USD/ZAR is not suddenly reversing on better economic data coming from South Africa. And the abrupt bearish price action being seen by the USD/ZAR could still prove to be wishful thinking and simply reverse upwards again. Traders should remember the U.S jobs and earning data will be released on Friday, and if these statistics create doubt about the U.S Fed’s next move the USD/ZAR could become instantly volatile.

Short Term Technical and Sentiment Readings are based on Perception

• Short term support for the USD/ZAR around 17.63000 could prove to be critical if it is proven vulnerable and could spark more selling which could aim for the 17.60000 level.
• Speculative wagers may lean towards bearish sentiment in the short term and try to take advantage of the trend, risk management is important and traders need to be vigilant regarding reversals.

After watching a long term bullish trend in the USD/ZAR and fighting the notion the currency pair has been overbought, traders may have a short term opportunity to wager on the suddenly bearish trend. However trading the past day and a half which has produced selling in the USD/ZAR is being done based on the notion financial houses believe the U.S Fed is going to begin to put the brakes on its hawkish interest rate policy, this may prove wrong eventually.

If the financial houses are correct, the USD/ZAR would find more downwards price action, but if a dark cloud were to appear though this ‘new’ outlook could suddenly evaporate. Traders cannot be blamed for looking for some downside momentum in the short term, but they should be careful and not be overly ambitious when pursuing their selling positions.

USD/ZAR Short Term Outlook:

• Current Resistance: 17.68700
• Current Support: 17.62300
• High Target: 18.11900
• Low Target: 17.74300

  (Click on image to enlarge)

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