The USD/MXN traded within sight of 21.00000 yesterday, but did not break it and this took place as nervous conditions were on full display before the U.S. Federal Reserve’s monetary policy statement. The USD/MXN has turned in a rather solid bullish trend since the 26th of October after the pair traded near a low of 20.13000. However, after reaching yesterday’s high around the 20.98000 level the USD/MXN began to reverse lower and touched a low of nearly 20.53000.
In early trading this morning the USD/MXN continues to situate its value near the 20.58000 ratio. There is certainly the potential another wave of nervous trading could be demonstrated within the USD/MXN as financial institutions continue to react to yesterday’s Fed FOMC Statement, but the likelihood is that most of the large transactional volumes which positioned themselves for the U.S release has been accomplished. The door is now open to speculators to contemplate where the USD/MXN will find equilibrium.
The past few months of trading in the USD/MXN have seen choppy conditions without any long-term trends being able to truly sustain. Yesterday’s highs which produced upper realms of value not sincerely traded since March of 2021 have reversed lower.
The question is if yesterday’s high was part of nervous buying and if the USD/MXN will once again resume a more bearish trajectory. It all depends on perspectives which will be attained technically via charts. A look at a one-year chart shows the USD/MXN within the middle of its range, a six-month chart shows the Forex pair traversing within a higher price band as does a three-month glance.
If current support near the 20.50000 levels begins to falter, it could create ammunition for more speculative selling based on the notion the USD/MXN could challenge lows demonstrated from the last week of October until the 1st of November. Cautious traders may feel like the USD/MXN could reverse higher from its current values and it certainly could.
However, aggressive traders who believe the vast amount of buying demonstrated in the USD/MXN the past handful of days was overdone, may turn their attention to support ratios below and target them. Selling the USD/MXN on slight upticks and looking for downside price action to resume may be a logical near-term wager.
Mexican Peso Short-Term Outlook
Current Resistance: 20.65000
Current Support: 20.49000
High Target: 20.86000
Low Target: 20.35000
