As of this writing the USD/MXN is near the 18.0700 level with rather quick turbulent price movement being demonstrated, but also as the currency pair battles near a low for the week. On Friday of last week the USD/MXN did fall below 18.00000 momentarily, after touching a high of nearly 18.42525 on Thursday.
The trading conditions in the USD/MXN have mirrored the volatility seen in other major currencies, but it is worth noting the USD/MXN is also showing a tendency to fight lower. Admittedly, the moves lower in the USD/MXN have been taking place after rather solid moves upwards, which has caused speculative problems for traders accustomed to only seeking one direction. The past two weeks of trading in the USD/MXN have seen highs challenged a few times when the currency pair climbed above the 18.43000 level and further since the 6th of October.
USD/MXD Volatility Likely Not Finished as Global Market Conditions Remain Fragile
The USD/MXN has been a rather consistently strong bearish currency pair over the long term, but since late July this notion of an everlasting downward trend has vanished and traders have needed to contemplate new tactics while pursuing their wagers. The USD/MXN was trading near 16.70000 in late August. Moves higher have seen rather strong selling on many occasions, but timing the moment when these reversals lower will take place the past three months has grown increasingly more difficult as support levels have proven more durable.
While the USD/MXN remains above the 18.00000 level it may appear overbought to traders, but the more the currency pair remains above this mark with consistency, questions will emerge about current price levels having found a potential equilibrium in financial institutions.
U.S Federal Reserve Delivers FOMC Statement this Wednesday
The U.S. Federal Reserve will release its Federal Funds Rate and FOMC Statement this Wednesday. Investors do not expect an interest rate hike from the U.S. central bank this week, but its rhetoric will be given plenty of attention. Risk-averse conditions linger in the global markets due to concerns about tensions in the Middle East, and worries about financial assets such as U.S Treasuries and selling pressure in U.S stock indices. The USD/MXN has been rattled by knock-on effects from this nervous sentiment and this has caused the currency pair to touch high water marks not seen since late March - the past few weeks in a choppy manner.
- Traders may want to use support ratios near the 18.05000 mark in the short term as an important juncture, if a move happens below this ratio it could signal additional selling pressure is building.
- However, traders need to keep in mind the U.S. Federal Reserve’s meeting this coming Wednesday and its pronouncements. Until the Fed speaks, trading is likely to remain rather volatile with rapid changes in direction for the USD/MXN near term.
USD/MXN Short Term Outlook:
Current Resistance: 18.10100
Current Support: 18.05010
High Target: 18.19330
Low Target: 17.94640
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