The USD/MXN has turned bullish the past two trading sessions and resistance levels have been brushed away in a quick fashion.
The USD/MXN has displayed why it can be a volatile forex pair to speculate on as a sudden bullish trend for the US Dollar has emerged. Resistance levels which looked comfortable early last week have been challenged and broken on Friday, and they are still being tested early today. Current resistance for the USD/MXN may be the 22.40000 mark, but this juncture could prove weak too and it if broken a march upwards towards the 22.60000 is conceivable.
Mexico continues to show bad economic data and concerns are mounting regarding the nation’s ability to produce a quick turnaround as coronavirus confronts its population. However, it should be noted that a one month chart for the USD/MXN still demonstrates a bearish trend for the forex pair. The juncture of 22.60000 could prove important for the Mexican Peso. If this resistance level is broken it could set off alarm bells and speculators may believe a bullish trend for the US Dollar against the MXN could pick up momentum.
However, as questions and worries about Mexico’s ability to cope with coronavirus and its economic impact are certainly reasons for concern, the USD/MXN is not a one trick pony. The US Dollar continues to display weakness and this global trend may not be ready to reverse. While the USD has done well the past few days against emerging market currencies, the USD/MXN will likely continue to demonstrate a bearish trend technically on occasion.
The direction of the forex market is never a one way avenue and experienced speculators know that currencies fluctuate in value. As the USD/MXN has found buyers the past couple of trading days, speculators may also being eyeing this forex pair as a place to look for developing reversals. So how do you do that safely? The magic may be the ability to have enough patience and allow the Mexican Peso to continue to test resistance levels and look for a duration where buying runs out of steam.
If the USD/MXN begins to languish in its current price vicinity, traders cannot be faulted for believing an opportunity will grow for selling to emerge again. Carefully chosen limit orders to sell the USD/MXN within the price range of 22.38000 to 22.4000 could prove an interesting speculative selling position with proper stop loss orders placed above.
Mexican Peso Short Term Outlook:
Current Resistance: 22.40000
Current Support: 22.10000
High Target: 22.60000
Low Target: 22.00000