The USD/MXN is tantalizingly close to important support levels even in the midst of bullish sentiment creeping into the USD in Forex. After hitting a high of 20.97000 on the 24th of March, the USD/MXN has put in incremental selling, which has brought it back into sight of key support levels. Early this morning, the USD/MXN has moved slightly higher, but traders need to understand that volumes are very light due to the long holiday weekend being celebrated.
As the USD/MXN trades slightly above the 20.32000 level, speculators who have used long-term bearish sentiment to help guide their decisions may be reconsidering their perceptions due to the recent strength of the USD globally. However, technical charts should not be discounted and the USD/MXN continues to display an ability to traverse lower in a rather consistent manner. Yes, the USD/MXN was trading near 19.88000 on the 12th of February.
However, the USD/MXN was also trading near 20.260000 on the 19th of February. A high of nearly 21.68000 was made on the 8th of March and, since then, the USD/MXN has proven it has the ability to move lower. If the Forex pair is able to move downwards and break the 20.26000 mark seen in the third week of February, it may signal that the bearish sentiment of the USD/MXN remains intact.
Taking into consideration the rather light trading volume which will likely be seen today, traders should be cautious short term. The USD/MXN may have proven over the past month from a technical perspective that ‘smart money’ wagered on bullish momentum early on when US stimulus packages became ‘known’ starting in February, but that long-term sentiment is proving itself to be a big factor once again and is reigniting bearish behavior.
The current price of the USD/MXN remains challenging and traders should potentially seek short-term positions and use quick-hitting trades. Perhaps buying the USD/MXN and looking for small moves upward short term will be the right decision until a strong trend re-emerges. The next couple of days within the USD/MXN may produce volatility as volumes begin to return to normal. The USD/MXN may remain within a bearish stance long term, but it will not be delivered without a fight.
Mexican Peso Short-Term Outlook:
Current Resistance: 20.41000
Current Support: 20.26000
High Target: 20.61000
Low Target: 20.13000
