- As of this morning the USD/MXN is near the 16.71210 ratio which is within sight of lows seen in August of 2023.
- The USD/MXN touched the 16.64450 vicinity in the middle of last week, but reversed slightly higher when U.S inflation data again proved problematic with higher than anticipated PPI results on Thursday.
- However, even as U.S inflation remains stubborn and the outlook for the Federal Reserve is murky, the USD/MXN has been fighting within the lower elements of its bearish depths.
The Mexican Peso has been strong against the USD over the long-term and its current values are swimming within waters last traversed in a sustained manner in 2015. Yes, that is correct; it has essentially been almost nine years since the USD/MXN has seen these values on a consistent basis.
Crude Oil Prices and the USD/MXN and Other Magic
The current price of WTI Crude Oil is now testing the 80.00 USD per barrel level. The ability of the commodity to create a stronger trend in the past month is perhaps a coincidence regarding the renewed bearish trend in the USD/MXN, but it certainly doesn’t hurt. The ability of the USD/MXN to move lower can be correlated to the broad Forex market in recent trading, because financial institutions have been wagering on a weaker USD to emerge in the mid-term.
However, questions persist regarding the ability of the U.S Federal Reserve to get too aggressive as inflation remains rather troublesome. The results of this murky outlook regarding Fed policy have caused volatility in the broad Forex market the past four months with plenty of sideways price action. And this is where it gets tricky for the USD/MXN, because while lows have been seen last week, the price action of the currency pair has resulted in reversals higher when lows have been tested in recent months. The question is if current support levels will again prove durable?
Momentum and Risk Taking Tactics in the USD/MXN
Trading on Thursday and Friday of last week produced some upwards momentum in the USD/MXN. Traders who are intent on looking for downside price action to emerge will need to use solid risk management. The coming few days are certain to be volatile in the broad Forex market and the USD/MXN, this as the Federal Reserve releases its FOMC Statement on Wednesday. Traders should not get overly ambitious and be willing to look for quick hitting results that limit risk.
- Resistance near the 16.72000 to 16.73000 levels should be watched in the short-term, if they continue to hold it may produce another test of support below.
- However, until the pronouncements of the Federal Reserve this Wednesday, choppy conditions in the USD/MXN are likely to be demonstrated as direction is fought over.
USD/MXN Short Term Outlook:
Current Resistance: 16.71850
Current Support: 16.70800
High Target: 16.75640
Low Target: 16.67420
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