(MENAFN- Daily Forex) The USD/ZAR is trading on top of vital support junctures this morning. The 16.40000 level may prove crucial and if it is broken speculators will have to look at technical charts from March. Yes, the current values of the USD/ZAR were tested one week ago, and the 16.40000 juncture was touched momentarily on the 10th of June. However, today''s trading may not produce sudden reversals higher.
Gold continues to be in a speculative flurry. The precious metal has added to its highs and some speculators are likely targeting the 2000.00 USD per ounce level. No, the South African Rand is not a direct representative of gold, but because South Africa is a major producer of the coveted metal, the value of the USD/ZAR is directly affected.
Traders looking to correlate the value of the South African Rand and gold will not have task. In early March the USD/ZAR traded in a value range of 15.20000 to 15.70000 before coronavirus started to impact global markets. At the same time gold was trading approximately between 1600.00 and 1675.00 USD per ounce. This is pointed out to show even though gold''s value in early March was less than it is now, the South African Rand actually was valued higher.
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The impact of coronavirus in South Africa has certainly hurt the nation economically and the USD/ZAR endured a bullish trend which saw its exchange rate climb to a high of nearly 19.28000 in early April. However, since this highest level, the USD/ZAR has systematically trended lower and in recent weeks it has begun to gain bearish momentum as the price of gold has soared.
Technically the USD/ZAR still can be perceived as being within the weaker levels of its value. Yes, the short term has produced solid selling and brought the South African Rand towards values it has not traversed in a sustained fashion since March.
However, if the short term trend remains intact and gold remains highly valued, there may be more room for speculators to seek downward momentum. Risk management is needed certainly, but resistance levels near the 16.55000 level could prove opportunistic as a stop loss ratio in order to seek further declines via selling the USD/ZAR at its current values.
South African Rand Short Term Outlook:
Current Resistance: 16.55000
Current Support: 16.40000
High Target: 16.60000
Low Target: 16.30000
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