The USD/MXN moved higher with a sincere amount of price velocity last week which was likely unexpected for most financial institutions and speculators. Resistance levels were proven vulnerable and the price velocity upwards was dramatic considering the USD/MXN has been one of the few currency pairs that has seen the USD remain muted in strength the past year.
USD/MXN Current Prices Challenging Prices not seen since March
The current price of the USD/MXN is near 18.25275, which is off lows seen on Friday of nearly 18.50025. The ability to come off highs shows that financial institutions may believe the USD/MXN was overbought last week based on existing nervousness in the broad markets. Last Friday’s jobs numbers came in with mixed results, but the headline data showed more hiring than expected. The short-term is likely to remain rather choppy for the USD/MXN and traders should keep in mind U.S. banks are closed today for the Columbus Day holiday.
On Wednesday and Thursday of this week, the U.S. will release important PPI and CPI statistics. These inflation reports will prove crucial for Forex including the USD/MXN. The price of Crude Oil remains a troubling consideration for potential inflation, but the price of the commodity has come off highs seen a bit more than one week ago. While the price of Crude Oil has dropped, the decline was likely not a significant factor in the buying of the USD/MXN.
Broad Market Nervousness and the USD/MXN
The USD/MXN proved it is not immune to the nervousness within the broad Forex market. Financial institutions certainly created a stronger USD late last week and U.S Treasury yields continue to remain high. The USD/MXN has correlated to the broad Forex market, and when the USD/MXN went from 17.60000 to 18.00000 last Tuesday it was certainly a warning sign that risk-adverse conditions were strong in the currency pair.
This Wednesday the U.S. Federal Reserve will release its FOMC Meeting Minutes publication. While many financial institutions believe the U.S. central bank will increase its Federal Funds Rate in November, the inflation numbers coming this week will affect the mid-term outlook. The broad Forex markets remain nervous, and the USD/MXN should be treated carefully in the short and near term. Speculators who are inclined to believe the USD/MXN has been overbought recently should keep their targets realistic and not be overly ambitious regarding price goals.
- Resistance for the USD/MXN around 18.35000 should be monitored in the short term.
- If resistance levels prove durable in the near term this could signal the potential for reversals to develop, but they might be fragile because nervousness remains strong in the broad markets.
USD/MXN Short Term Outlook:
Current Resistance: 18.36100
Current Support: 18.23600
High Target: 18.40500
Low Target: 18.19100
