The USD/MXN is trading near the 17.23300 ratio as of this writing. The high for the USD/MXN last week took place on Wednesday around the 17.46450 vicinity and upon the U.S Federal Reserve’s FOMC Statement the currency pair traded lower mirroring the broad Forex market. However, the weakness of the USD which was seen in many other currency pairs respectively was rather polite in the USD/MXN. While the ratio of 17.20000 was challenged on Wednesday, support began to create a reversal.
The high in the USD/MXN on Thursday was near the 17.40000 mark, this before the currency pair turned volatile and after some choppiness a low of 17.14040 was fought over. Friday’s trading saw a continuation of choppiness and a high of 17.34300 was approached.
Trading Range of USD/MXN Needs Perspective
While the USD/MXN certainly traded lower after the U.S Fed announced it will begin to take a different path regarding its monetary policy outlook, the Mexican Peso did not show the same amount strength as many other major currencies which largely moved back to mid-term ratios as the USD weakened. The inability of the USD/MXN to build solid momentum downward suggests that financial institutions may believe the currency pair is within a fair equilibrium.
If a one month chart of the USD/MXN is considered it is easy to see the currency pair has traded at lower marks from the third week of November until the first week of December. The push upwards on Friday of last week after early December price support was tested is noteworthy. Behavioral sentiment globally remains optimistic as risk appetite has been showing its teeth in U.S equities and U.S Treasury yields have decreased.
Short-Term Speculation and Risk Management in the USD/MXN
Traders who feel compelled to search for lower values in the USD/MXN should not become overly ambitious. While the mid-term outlook of the USD appears to be weaker, short-term traders based on last week’s results in the USD/MXN may have to deal with incremental moves lower, but also with the potential of choppy reversals. Risk management is urged.
- Short-term support near the 17.20000 may prove to be a testing ground psychologically for traders and financial institutions dealing with the USD/MXN.
- If the USD/MXN can sustain value below the 17.20000 this could ignite additional tests lower, but the near-term may prove to be rather technically speculative.
- Resistance near the 17.26000 to 17.28000 should be watched to see if it remains durable.
- Traders should note that the coming holidays will also factor into the USD/MXN as financial houses start to slow down their trading later this week for the Christmas break.
USD/MXN Short Term Outlook:
Current Resistance: 17.26100
Current Support: 17.20300
High Target: 17.29500
Low Target: 17.17200
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