The US dollar initially pulled back during the trading session on Monday, but found support again at the 18.90 pesos level, to turn and slam into the 19 pesos level. However, just above there is the 50 day EMA, so having said that it makes sense that we could see a bit of selling pressure here. Because of this I suspect that we could roll over from here and go looking towards the 18.70 pesos level yet again. The market has been in a downtrend for a while, so it’ll be interesting to see whether or not we can break down to a fresh, new lows. Until we do, I think we are probably looking more at consolidation and a bit of a churn in this area.
Don’t forget that the Mexican peso is somewhat sensitive to the crude oil markets, which of course continue to be very frothy and did lose a little bit of money during the trading session. With that being the case it makes sense that we saw the greenback pick up a little bit of strength. However, the question now is whether or not the oil markets are simply cooling off, or if we are going to see a significant break down. If we see a significant break down in the crude oil market it’s somewhat likely that we will break out to the upside in this pair. All things being equal though, it does look like there is a lot of noise above.
If we can break above the shooting star from the Thursday session, which is at roughly 19.20 pesos, then we could see this pair pick up the minimum to the upside. Right now, it looks very likely to be a relatively interesting couple of days and the Mexican peso, so pay attention to the levels mentioned, as they can give us a heads up as to where we go going forward.
