Risk appetite is on the increase among global investors and the USD/MXN currency pair has seen a surge of selling. The Mexican Peso has broken short term support levels on a steady basis since the middle of last week as a sudden reversal downwards has emerged. Support around the 22.1000 looks vulnerable and a test of the 22.0000 juncture could come into focus quickly today if financial institutions continue to pour capital into the global markets.
The month of June saw plenty of trading between the 21.6000 and 22.8000 junctures, so a retest of stronger values for the Mexican Peso may prove a logical short term trend. Traders will have plenty of opportunities in the coming days to test their technical perceptions versus the forex market. If risk appetite continues to be demonstrated and the USD/MXN finds itself in a renewed bearish trend, speculators may simply want to follow the crowd and use limit orders to execute take profits at junctures they believe are suitable.
As the week starts global markets show a definite interest in creating a positive movement among global equities, and indices are rising in Asia, and early calls from the Americas show a positive outlook for US stocks. However, lurking in the shadows is statistical evidence that coronavirus continues to mount an increasingly significant rate of infection in the US and importantly in Mexico too. And the question speculators need to keep in mind is at what point will these potentially disastrous coronavirus numbers begin to impact trading sentiment again?
The USD/MXN appears ready to pursue its short term bearish move and the Mexican Peso may find itself targeting support near the 22.0000 mark logically. A break below this juncture will set off a definite test of range trading but the USD/MXN could pursue lower support and easily test the 21.9000 level.
However, it is likely that this short term selling trend will eventually run into strong support and begin to see a reversal emerge again. Presently, it seems unlikely that investors will be willing to overlook the shadows on the horizon being caused by a coronavirus and forget about this danger. While risk appetite may be the flavor of the day, there is a significant chance what will take place over the next few days of trading is a test of the range which sees reversals higher come into play as risk appetite find itself doubted.
Mexican Peso Short Term Outlook:
Current Resistance: 22.6500
Current Support: 22.1000
High Target: 23.1000
Low Target: 21.9000
