Long term support is now being tested in the USD/MXN.
The Forex pair is trading as of this writing below the important psychological level of 20.00000 by a slim margin, and the next critical juncture appears to be 19.93000, if it is challenged with downside pressure. The USD/MXN is touching values it has not been able to sincerely trade since early March.
Global risk appetite has been steady the past day, but some traders may be anticipating some caution to come into the equity markets because of the rather staggeringly bad coronavirus numbers developing in the US. However, in the midst of the recent surge of pandemic statistics which have hit the US again, equity indices on Wall Street have challenged highs. At the same time, the USD/MXN has also been able to sustain its lower values and traverse a bearish trend lower.
Speculators should look at technical charts; the USD/MXN has challenged these support levels before. Twice in late November, the Mexican peso pressured vital support levels near its current values and failed to puncture the 19.93000 juncture. Many traders are definitely asking if the third time will be the charm and if the USD/MXN is about to embark on a price band which reestablishes pre-coronavirus values seen in February.
Speculators who seek selling positions of the USD/MXN also have the luxury of using rather close resistance levels, which have proven to be rather adequate the past few days. Yes, the USD/MXN could certainly reverse higher if risk appetite turns conservative short term, but the long-term trend of the Mexican peso has certainly indicated that it has the ability to track lower against the USD. Traders may be nervous pursuing the USD/MXN bearish trend at its current values, but if the Mexican peso can sustain values below the 20.00000 juncture, it may be an important signal that accumulation is building and a breakout could occur.
Selling the USD/MXN may prove the logical choice short term, and speculators can use stop loss ratios to protect against reversals higher if they get out of control. The recent trading within the USD/MXN has proven extremely interesting, and as important support gets tested, now may be the time to see if the 19.93000 level will finally be broken lower.
Mexican Peso Short-Term Outlook:
- Current Resistance: 20.04000
- Current Support: 19.93000
- High Target: 20.12000
- Low Target: 19.82000