Argentina is mired within an economic spiral which has the appearance of a horror movie. The USD/ARS continues to trend higher, as the Argentine peso literally shows no capability to produce solid financial backing. The economy of Argentina continues to be burdened by a quagmire of storms, including government subsidies which try to help the poor, massive taxation which punishes the wealthy, and gossip that corruption remains high among government officials.
Argentina continues to talk to the IMF about helping reduce its economic burden, but recent talks appear to have run into obstacles and an agreement is not imminent. The value of the USD/ARS is now over 86.000 via the official Argentine government Forex rate, and known black market exchange values are close to 93% higher on Florida Street in Buenos Aires. Speculators need to understand that the rate they are being quoted from their Forex brokers is the official government price.
The upward trajectory of the USD/ARS is not likely to change anytime soon. While talks go on between the IMF and Argentina, no agreement may happen until the Argentina government is forced to capitulate and agree to fiscal demands because it is running out of money. There are rumors circulating that Argentina may wait until March to conclude an agreement for further international monetary assistance.
Technically, the USD/ARS is similar to a step ladder. The Forex pair continues to take incremental steps higher, mixed in with the occasional downward reversal, which is short-lived. Speculators need to be patient when they are trading the USD/ARS; they should use conservative amounts of leverage and yes, risk management via stop losses below current market levels are wise. Traders should enter the USD/ARS with limit orders to protect themselves against ugly fills which can develop because of a lack of volume and cause unexpected and costly surprises.
Buying the USD/ARS remains the only logical choice for speculators of this Forex pair. Traders need to understand all parameters regarding carrying charges overnight when they pursue the bullish momentum of the USD/ARS, because it is frequently necessary to hold onto a position for several days in order for it to generate the move which is anticipated. Patience and a conservative approach can prove worthwhile for buyers of the USD/ARS.
Argentine Peso Short-Term Outlook:
- Current Resistance: 87.000
- Current Support: 85.750
- High Target: 87.400
- Low Target: 85.350
