The USD/MXN is trading near important highs, and its short-term price range has been wide which may prove attractive to speculators.
The USD/MXN has provided traders with a rather large price range the past week of trading, while actually delivering a rather intriguing technical path highlighting support and resistance levels. As of this writing, the USD/MXN is near the 19.85900 ratios and has achieved a high around the 19.88250 mark early in the morning. Yesterday the USD/MXN was able to trade near the 19.91900 ratios for a brief amount of time.
Intriguingly last Monday on the 5th of December the USD/MXN was also trading near the 19.86000 momentarily but then sold off and by Tuesday the 6th of December was near the 19.63200 ratios. The past week of trading has seen a rather steady, and challenging, range between the 19.60000 and 19.87000 prices tested continuously.
Lower Crude Oil Prices and U.S Federal Reserve a Factor in USD/MXN
The USD/MXN may be within acceptable price equilibrium for financial houses at the moment, but the last week of trading via a consolidated ranger may not last much longer. The price of Crude Oil has certainly declined and this has created some slight weakness in the Mexican Peso perhaps, but this has been balanced by the notion the U.S Federal Reserve may become less aggressive regarding its interest rate policy.
As more fundamental insights are waiting for traders of the USD/MXN, perhaps that is a reason why the currency pair has lingered and created a rather intriguing range recently. However, the consolidation is not likely to last. U.S Consumer Price Index data will be published today and the U.S Fed will potentially raise its interest rate by 0.50% tomorrow.
- Short-term traders may look at the 19.90000 ratios as too high a price for the USD/MXN and try to sell the currency pair when resistance is tested, but they should be careful and use risk management.
- The short-term risk events on the calendar will cause a test of technical ranges. If resistance proves durable over the next two days, this could be a potentially bearish signal for the USD/MXN, but it may take a while to develop.
Risk Factors are known and Contrarians may Wager on a Reversal Lower
Trading can be a dangerous endeavor; it is not easy to consistently have winning wagers while speculating on Forex pairs. The test of highs by the USD/MXN doesn’t mean instant reversals will now develop.
The USD/MXN traded higher and was near the 20.50000 level late in September. However, speculators who are looking at technical charts may be tempted to believe the USD/MXN has been overbought in the past couple of days. Risk-taking tactics should be widely used to protect against volatility which will come today and tomorrow because of the U.S inflation data and U.S central bank rhetoric.
USD/MXN Short-Term Outlook:
Current Resistance: 19.8990
Current Support: 19.85100
High Target: 19.95400
Low Target: 19.76100
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