The Argentine Peso’s erosion of value has been documented and technical charts continue to display profound weakness. Speculators of the USD/ARS with the ability to buy the forex pair and hold onto their positions will continue to seek targets higher. Resistance near the 72.000 level could be touched in the near future.
A deadline of August 4th has been mandated by international creditors as they seek a formal agreement with Argentina regarding final numbers for debt which is owed. The percentages of the interest rates which will be paid back remain a stumbling block and the legal battle between Argentina and international financial institutions remains murky. Argentina will seek the best deal it can make, but it is certain that some investors who bought the nation’s debt will be hard to convince. Buying Argentine debt by creditors has always been a dangerous game; the outcome will likely be unwelcome by both parties, but in many respects, the creditors and Argentina knew this would happen before they even entered into agreements in the past.
A five-day chart for speculators looking at pure technical charts shows the ability of the Argentina Peso to sometimes test support below after it has broken higher to new resistance levels. However, traders must keep in mind if they are speculating on the value of the USD/ARS that they are undertaking a completely virtual trade.
The value of the USD/ARS on forex platforms is mostly the official Argentine government value. The listed exchange rate is not the value of exchange a person on the street would get if they want to buy US Dollars with Argentine Pesos, that exchange rate is much higher and shows the real weakness of the ARS.
The USD/ARS remains a speculators game, patience is needed and the ability to withstand carrying costs overnight must be factored. Traders also need to be able to withstand volatility which cannot be easily explained if a sudden bearish spike emerges.
Buying the USD/ARS still seems like the only logical choice if you are trading this forex pair. The potential of a sudden deal between Argentina and its creditors could emerge and create a sudden wave of selling the USD/ARS, but its fundamental would have to be questioned far and wide until transparency returns to the Argentine economic landscape and that is likely not about to happen. The trend favors buying the USD/ARS still.
Argentine Peso Short Term Outlook:
Current Resistance: 71.900
Current Support: 71.550
High Target: 72.000
Low Target: 71.500
