While the USD/MXN trades in a rather well-practiced range, what looks particularly interesting is that resistance up above seems to have shown signs of becoming stronger and is causing reversals. Technical traders may suspect the USD/MXN has less risk to move upwards and greater downside potential as a selling candidate. Taking into consideration the three-month trend of the Mexican Peso which touched its weakest values in April and its steady progression towards better values against the US Dollar since then, shorting the forex pair should be the favored position still.
After displaying strong resistance around the 23.0000 the past week, early trading the past couple of days may have speculators suspecting its actual resistance of 22.5000 could prove capable. If resistance continues to hold and the Mexican Peso shows signs of gaining value by moving lower and towards support junctures around 22.1000 traders could not be faulted for targeting goals of 22.000 and below. Certainly, resistance could be tested higher and a reasonable wager for higher resistance is around the 22.7000 mark.
The US Dollar has fluctuated in forex against the major currencies the past couple of days, but it has not been able to make a stronger value move and this is because risk appetite appears to be increasing again in the global markets. Stronger risk appetite and profitable returns upwards on global stock indices could support the selling of the US Dollar against many currencies and the Mexican Peso should be considered attractive too.
Speculators looking to sell the USD/MXN short term cannot be faulted when looking at current resistance levels and the past two days of trading. The Mexican Peso appears ready to once again find additional value. Traders looking to sell the USD/MXN around values between 22.2000 and 22.4000 and use proper risk management could find themselves in a position to take advantage of a forex market that could be preparing for a weaker US Dollar. The Mexican Peso only last week traded near values of 21.7000 and this juncture is a target many speculators may be envisioning as a solid possibility.
Mexican Peso Short Term Outlook:
Current Resistance: 22.5000
Current Support: 22.000
High Target: 22.8000
Low Target: 21.7000
