USD/MXN Forecast: November 2023

• The US dollar has been consolidating against the Mexican peso during a majority of the month of October, as we continue to bang against a very serious significant resistance barrier.
• This is found at the 18.50 MXN level, and if we can break above there it could really start to send this market higher.
• The 200-Week EMA is near the 19.15 MXN level, and that could be the next target if we can get at least a daily close above that level.

Needless to say, there are a lot of questions right now because the interest rate differential does favor Mexico. The US dollar is very strong, mainly due to higher interest rates but also the potential safety trade. If we continue to get a lot of “risk off behavior”, then it would make a certain amount of sense that this market continues to rally. Breaking above the 200-Week EMA would be a major turnaround, perhaps opening up a move to the 20 pesos level, maybe even 21 pesos after that. While I don’t know whether or not we can get there during the month of November, it certainly is a possibility.

On the other hand, if the market were to break down below the lows of the month in October, it’s possible that the market could drop down to the 17 pesos level, an area where we attempted to recover from during the bulk of the month. Anything below there then could open up quite a bit of significant selling pressure. While the pair is most certainly in a downtrend, it is worth noting that we recently have seen a surge higher, with October mainly being more or less a consolidation timeframe.

The 50-Week EMA is sitting in the middle of these couple of candlesticks on the weekly chart, and it of course does attract a certain amount of attention. It is also flattening out, which suggests that we are more likely than not to see a little bit of a consolidation in the meantime. However, if and when I see some type of impulsive candlestick, I am more than willing to follow it, regardless of the direction. Obviously, this is a market that can be quite noisy but we could be at a major inflection point that could become more of an investment than a trade if we do continue the turnaround.