USD/MXN: Volatile Range Must Be Considered as News Lurks

Robert Petrucci

The USD/MXN is hovering near the 20.00000 juncture as traders anticipate the interest decision from the U.S Federal Reserve later today.

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On the 11th of June, the USD/MXN was near the 19.65000 ratio and securely within its bearish trajectory, but as of this morning, the Forex pair is trading near the 20.00000 juncture. Some technical traders may not like to hear the mention of news regarding the dynamics in Forex, but the U.S Federal Reserve is going to announce its interest rate policy later today and it is certainly a risk-averse endeavor.

Technically, the USD/MXN has been within a strong bearish trend, and its ability to test lower depths was displayed on a regular basis until early last week. However, in the past five days of trading, the USD/MXN has incrementally risen and broken through short-term resistance on a regular basis. Now, the not-so-coincidently psychological value of 20.00000 is being tested by the USD/MXN.

Speculators must anticipate a large amount of volatility as the day progresses, and need to understand that immediately before and after the U.S FOMC Policy Statement tonight the USD/MXN will move fast. Traders will need to be prepared for the choppy results and have stop-loss orders working if they choose to participate in what are certain to be swift conditions.

Having attained a move higher the past five days of trading, the USD/MXN may feel like this bullish reversal may gather more momentum near term. However, that may not be correct, and it is possible that the recent move higher has largely taken place because financial institutions are positioning themselves ahead of the U.S central bank’s pronouncements, by simply hedging their outlooks and holding onto the USD a bit more than is typical. If the U.S Federal Reserve remains relatively dovish via their outlook today, this could set off technical selling. One sign that big institutions have not abandoned their bearish outlooks is the notion that the USD/MXN has not gained upwards substantially.

Traders should consider selling the USD/MXN on slight moves higher. They should certainly use stop-loss and take-profit orders to guard against volatility. Speculators who are aggressive and want to position themselves before the news release may want to sell by using limit orders placed near perceived resistance levels above current market conditions. Traders will need to be patient and emotionally strong if they are wagering on the USD/MXN in the short term.

Mexican Peso Short-Term Outlook:

Current Resistance: 20.04000

Current Support: 19.95000

High Target: 20.21000

Low Target: 19.79000

USD/MXN

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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