The USD/MXN has demonstrated an ability to puncture resistance levels the past few days of trading. The sudden bullish momentum has been exhibited after a solid long-term bearish trend was accomplished and has begun to knock on the door of critical support levels below on the 6th of January.
After approaching key lower values early last week not truly tested since early March of 2020, the USD/MXN has traversed higher. The reversal upwards has been relatively swift and, after touching the 20.00000 level on Thursday, Friday saw the important psychological mark punctured completely and trading has sustained value above this juncture.
The USD/MXN has experienced a very solid bearish run downwards, and speculators who have been pursuing this trend may have to practice patience and consider the potential that short-term dynamics may be experiencing a shift in sentiment. However, the recent surge higher has occurred only in the short term and does not necessarily mean that a sea change in the direction of the USD/MXN is about to be exhibited long term. The question for short-term traders is what direction technical charts are suggesting now.
Traders should watch the USD/MXN cautiously and the 20.20000 can be interpreted as an important juncture. If the 20.20000 mark fails to hold as resistance and the 20.25000 level is tested quickly, it could cause a temporary storm to swirl. On the 21st of December, a spike higher took place and the 20.65000 juncture was neared, but this happened as light holiday trading was occurring in Forex.
Global risk appetite remains optimistic and can even be described as exuberant. However, the USD has been strong the past few days in Forex against many major currencies including the Mexican peso. The long-term bearish trend of the USD/MXN has not been killed quite yet, and the value range of the Forex pair remains evident. Short-term traders should practice patience and contemplate risk management ratios conservatively.
Speculators may want to try and sell the USD/MXN if the Forex pair shows an ability to sustain its values below current resistance levels. Taking into consideration the results over the past few days within Forex, traders should be cautious, but the belief that the USD/MXN will again see its bearish trend reignited cannot be faulted.
Mexican Peso Short-Term Outlook:
- Current Resistance: 20.20000
- Current Support: 20.09000
- High Target: 20.36000
- Low Target: 20.01000
