The USD/MXN remained in a tight range as the week began, but it did see a slight, incremental, bullish trend emerge short term yesterday.
Speculators of the USD/MXN may becoming impatient with the Forex pair as it hovers near important support levels as trading remains cautious. Yesterday’s price action did see an incremental bullish trend run for a while, but after hitting the 20.21000 juncture, the USD/MXN began to see a rather swift reversal lower. In early trading this morning, the Forex pair is near the 20.12000 vicinity as it clearly awaits more impetus.
Risk appetite yesterday was not abundant and many global equity indices did see slight declines, but the selling remained rather polite. Yes, the current range of the USD/MXN may in fact prove to be an accepted equilibrium by financial institutions, but there is reason to suspect the 20.00000 juncture may continue to be targeted. From a technical perspective, the suspicion that the USD/MXN may remain within a bearish trend is based on long-term charts which clearly show that the Forex pair has enjoyed a value between 19.00000 and 20.00000 for the past few years.
The USD/MXN still remains within a higher value compared to pre-coronavirus days. Mexico will be faced with an array of questions regarding its fiscal and economic outlook due to complications caused by the pandemic, but so will a majority of the world’s nations. The USD remains under a very dovish policy by the Federal Reserve, and the Biden administration, set to take power in late January, will not change the direction.
Resistance levels definitely need to be watched. It is possible that the USD/MXN may see another slight reversal develop higher. If the 20.180000 mark is challenged and is punctured, the Forex pair could once again traverse near the 20.20000 level easily. However, if these resistance junctures prove adequate and risk appetite does prove stronger than yesterday, the USD/MXN could then begin to challenge values below.
Speculators may want to continue pursuing downward movement of the USD/MXN. A logical tactic would be to use resistance levels above as targets to trigger selling limit orders and seek reversals lower. If a strong trend begins to be demonstrated with downward momentum, traders may want to sell the USD/MXN if it punctures support near the 20.00005 juncture too and seek targets values below.
Mexican Peso Short-Term Outlook:
- Current Resistance: 20.17000
- Current Support: 20.05000
- High Target: 20.23000
- Low Target: 19.85000