After breaking the 20.20000 resistance level late last week, the USD/MXN has turned bullish and seen upwards momentum generated. The absence of a sincere reversal lower and maintaining its price velocity since last Friday is noticeable. Yes, a low of nearly 20.28000 was tested yesterday, but this remains well above the 20.20000 juncture which will be looked at technically for the time being as a rather distant support ratio short term.
As of this writing, the USD/MXN is traversing near the 1.33000 level, and a high of about 20.45000 was tested on Friday and also came into sight yesterday. The last time the USD/MXN traded at these heights was a bit more than two months ago, and the Forex pair traded at a high of nearly 20.75000 on the 18th of June.
Speculators are right to ask if the USD/MXN is overbought and may be skeptical about its sudden bullish momentum. After all, the Forex pair was testing an important lower price range only one week ago, when it battled its long-term support nemesis near the 19.90000 ratios. However, in the past few days of trading, the USD has gotten stronger across the Forex board and the USD/MXN has correlated to this shift in sentiment.
The USD/MXN is trading below important mid-term resistance levels, and until the Forex pair can break above the 20.40000 level and sustain its price, speculators may remain skeptical regarding its ability to sustain these heights. The USD/MXN has traded within the 19.90000 to 20.20000 price range for a quality amount of time. Yes there have been outliers, but the ability of the USD/MXN to remain outside of this value band would be a new reality for many traders who had become accustomed to this mindset.
The question speculators now must ask is if they should fight against the current bullish trend in the USD/MXN? It may prove wise to actually be a buyer of the USD/MXN on slight selloffs if the Forex pair remains comfortably above the 20.20000 ratio. If the junctures of 20.30000 to 20.202800 continue to look durable as support levels today, buying around these marks and looking for upside momentum to be demonstrated may be the worthwhile short-term wager.
Mexican Peso Short-Term Outlook:
Current Resistance: 20.37500
Current Support: 20.27200
High Target: 20.46700
Low Target: 20.22000
