- The USD/MXN is trading near the 17.09600 mark as of this writing; this number may appear to be a rather calm upwards movement for traders who have not been paying attention to daily fluctuations the past week.
- On Monday of last week the USD/MXN was near crucial mid-term support as the currency pair moved around the 16.8500 ratio.
- However, by Wednesday the USD/MXN was touching a high of nearly 17.38800 as USD strength hit the broad Forex markets.
The ability of the USD/MXN to correlate to global foreign exchange trading is a healthy sign. After the highs were made in the currency pair in the middle of last week, the USD/MXN began to selloff and went into the weekend near the 17.08000 ratio. This morning’s trading has kept the USD/MXN rather close to last week’s close. The firework display regarding price velocity in the USD/MXN has likely not finished and traders should anticipate additional displays in the near-term.
Behavioral Sentiment is Rather Fragile and is affecting the USD/MXN
Having been able to trade above the 17.00000 mark most of last week is a sign that financial institutions are still reacting to the belief the USD had sold off too much during the last couple of weeks in December. Yet, intriguingly while the USD has gained against most currencies, many major currency pairs including the USD/MXN remain within sight of important psychological price levels which could shift behavioral sentiment rapidly and begin to spark USD weakness again.
Having touched a high last Wednesday that had last been seen on the 14th of December is not a coincidence. This technical high essentially hit a value last exhibited in the wake of the U.S Federal Reserve’s monetary policy publication on the 13th of December. Volatility has tested important resistance and held. The USD/MXN was trading near the 17.57000 mark on the 5th of December, and was around 18.43450 briefly in the last week of October, this as sentiment revolving around the U.S Fed has flourished.
Return to Mid-Term Support Levels in the USD/MXN
The ability of the USD/MXN to move lower has been a dominant feature of the currency pair in the long-term. Yes, volatility upwards has certainly taken place and day traders need to always understand Forex is never a one-way avenue, but selling pressure in the USD/MXN has mid-term support in sight once again.
- The U.S will release important GDP and Core PCE reports on Thursday and Friday of this week.
- The move lower in the USD/MXN price since Wednesday is a healthy sign for bearish USD/MXN traders, but they should not get overly ambitious.
- Reversals remain a potential danger in the USD/MXN, and the U.S data later this week could cause strong volatility. Quick hitting trades may be the best speculative tactic in the short-term.
USD/MXN Short Term Outlook:
Current Resistance: 17.11400
Current Support: 17.08120
High Target: 17.16910
Low Target: 17.03890
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