The USD/MXN has experienced a wave of buying the past half-day as economic uncertainty increases in Mexico and global risk appetite appears rather muted.
After testing short term support levels in early trading yesterday, the USD/MXN has reversed as solid bullish momentum has surged. Resistance near the 22.9000 appears more vulnerable via technical short term charts. The past month of trading has provided speculators a lively range between 22.2000 and 23.0000. Speculators may be asking themselves if another test of resistance will prove weaker this time around if the bullish USD/MXN trend gains strength.
Risk appetite in the global markets appears fragile going into today’s trading for North America and it should be noted that equities in Mexico have not been able to mirror the success of other stock indices the past few months. Economic concerns also continue to mount in the nation as it becomes clear coronavirus is having a detrimental effect on people throughout Mexico. Informal workers in the nation who are a large percentage of the workforce are struggling, and the government has been criticized for not doing enough for these people who earn the majority of their money via cash income generated from their modest businesses which have essentially been ruined.
Yes, the USD/MXN remains within a rather consolidated range, but if global risk appetite struggles this week and worries grow regarding Mexico’s ability to manage its economic turmoil the US Dollar may remain within a bullish trend and begin to test resistance and surpass current technical junctures. Current market values may look intriguing to speculators if they believe short term resistance levels could prove unstable over the next couple of days. While the 22.9000 level has proven an opportunistic level above to seek reversals since the beginning of July, traders may be looking at the USD/MXN values achieved the last week of June when the forex pair traded between 23.0000 and 23.2000 levels and see room for momentum upwards.
The Mexican Peso needs a solid amount of risk management when trading; the USD/MXN has seen sudden bursts of trading wreck values in the past. Traders who believe the forex pair’s range will hold this time around may look at support levels of 22.4000 as short term targets if they have enough faith to short the USD/MXN at its current values. However, traders who are wagering on a bearish trend to emerge should be using stop losses wisely.
Mexican Peso Short Term Outlook:
Current Resistance: 22.9000
Current Support: 22.4000
High Target: 23.2000
Low Target: 22.2500