The USD/MXN continues to provide traders with a rather solid range to take advantage, this as U.S Federal Reserve policy battles higher energy prices.
The USD/MXN is trading near the 20.08400 mark as of this writing and traders should take into account rather quick conditions are happening across Forex. Global financial markets are showing nervousness and this has been expressed not only in Forex, but bond and equity markets too internationally. The USD/MXN was trading near a low of 19.93700 late yesterday, but then experienced a sharp move higher which touched around the 20.11200 ratio.
Risk Appetite and Dynamic Fundamentals Shifting Winds of USD/MXN
On the 12th of September the USD/MXN was trading near the 19.75000 level. Early last week the USD/MXN was again testing lower parts of its monthly range when it went to 19.94000, only to test the 20.15000 mark on the 6th of October. The USD/MXN is reacting to winds of rhetoric from the U.S Federal Reserve as it makes its hawkish interest rate policy known, but it is also being affected by the rather high price of Crude Oil which works as a mechanism in the other direction.
Conflicting fundamental data points are creating a rather interesting range for speculators in the USD/MNX to test. A range between 19.85000 and 20.24000 has been rather consistent the past month with outliers happening on occasion in the USD/MXN when ‘noise’ affected behavioral sentiment. The higher move suddenly last night likely didn’t happen because the 20.00000 was penetrated higher, it occurred because another dose of fear entered the global markets which sent equities into a late tailspin lower on Wall Street, this because of news generated from the United Kingdom.
Remarkably even as Trading Conditions Remain Nervous the USD/MXN has been Stable
The ability to fight off nervous global markets has kept the USD/MXN remarkably stable compared to many other major currency pairs. The reason for this ‘on the surface’ at least is the simple fact that Crude Oil prices continue to remain high and since Mexico is a large producer, the Mexican Peso has enjoyed a foundation of strength many other currencies have not been able to produce against the USD over the past year.
- Traders should be cautious today and monitor global market conditions, but if the price of Crude Oil remains within sight of the 88.00 to 90.00 USD mark this could help maintain the range of the USD/MXN.
- Resistance for the USD/MXN appears strong near the 20.11000 to 20.15000 levels, and if market conditions remain tranquil, these prices could be an interesting place to look for reversals lower.
Fragile global markets may take place in the near term, but if calm remains the USD/MXN may look overbought for the moment. Speculators looking for slight reversals lower may be tempted to be sellers, but take profit orders should be used and stop loss ratios definitely counted upon to stop bad outcomes. The range of the USD/MXN technically appears rather steady and traders may find an opportunity to take advantage of quiet conditions. However, if the markets turn stormy it is possible the USD/MXN could climb slightly higher and challenge upwards resistance.
USD/MXN Short Term Outlook:
Current Resistance: 20.10800
Current Support: 20.06300
High Target: 20.13700
Low Target: 19.97300
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