After attaining a high of nearly 20.66000 yesterday, a sudden and strong selling wave began to take hold in the USD/MXN. On the 11th of June, the USD/MXN was trading near the 19.65000 ratio. A high of nearly 20.75000 was hit on the 18th of June. The USD/MXN has proven volatile for many speculators, but yesterday’s lower move may signal a capitulation by bulls, and indicate bearish momentum is about to become a feature within the Forex pair again.
The USD has been strong against nearly all major currencies the past few weeks. Fundamental concerns about the U.S Federal Reserve’s interest rate policy have certainly been a factor in Forex. Technically, the USD/MXN has enjoyed a significant and protracted bearish trend, which was interrupted and led to the recent highs late last week. However, speculators may believe that the USD/MXN’s strong selling momentum which developed yesterday could signal that a change in sentiment is about to be expressed.
The USD/MXN is definitely trading above the important 20.0000 juncture and this may continue to be demonstrated in the near term. Traders should target support near the 20.29000 level as a short-term signal regarding technical direction. If downward momentum is displayed and the USD/MXN is able to sustain prices below the 20.30000 juncture, this may create an additional wave of selling in the Forex pair, but traders should not be too greedy as they pursue their short positions.
Traders will need to remain cautious in the near term and stay on alert for potential reversals higher. The past few weeks of trading in the USD/MXN has proven difficult for speculators who have been trying to jump onto the potential of bearish momentum reigniting. What may prove intriguing is that while other major Forex pairs have not substantially started selling momentum against the USD, the Mexican peso did so yesterday and because of its time zone, being directly aligned with the States, this may indicate that North American traders believe the USD has been overbought. Traders in Europe and Asia may still be waiting to join the party.
Selling the USD/MXN on slight moves higher may prove a capable trading tactic in the short term. Speculators can use current resistance levels as stop-loss ratios while pursuing additional bearish activity. The USD has been the dominant currency in Forex the past few weeks, thus traders should not expect a one-way avenue lower for the USD/MXN. However, selling the USD/MXN may prove to be a worthwhile speculative opportunity near term.
Mexican Peso Short-Term Outlook:
Current Resistance: 20.40000
Current Support: 20.29000
High Target: 20.51900
Low Target: 20.18000
