The USD/ MXN currently is around the 17.77750 realms as of this writing after starting last week’s trading near the 17.40600 ratio and will get the attention of speculators. The USD has taken on a stronger tone the past handful of trading days as risk-adverse sentiment has crept into the broad Forex market as financial institutions grow nervous about what the U.S. government and Federal Reserve will do next.
The Price Level of the USD/MXN may Look Overbought to Bullish Speculators
USD/MXN traders who have grown accustomed to selling the Forex pair as they speculate likely ran into troubling results last week. The long-term price trend of the USD/MXN has been bearish, and traders who have gotten to use to betting on declines from the currency pair may have been surprised by the incremental climb nearly the entire week. Yes, moves lower were certainly demonstrated in the USD/MXN, but buying momentum continued to mount and a high of nearly 17.79540 was seen on Friday.
Early trading this morning has sustained the highs made before going into the weekend, and the lack of a strong selloff early this morning may indicate nervous market sentiment remains. Risk events are on the horizon from the U.S. this week, but while economic data like PMI results will be seen tomorrow, it is Wednesday that most financial institutions have their eyes on. The U.S. Federal Reserve will release its FOMC Meeting Minutes late on Wednesday, and its content will likely get a reaction from USD/MXN traders and the broad Forex market. A lack of clarity regarding a potential June interest rate hike from the U.S. central bank is causing problems.
Concerns also Exist Regarding the U.S Debt Ceiling and are Causing Reactions in Forex
- The lack of an agreement on the U.S. ‘debt ceiling’ is troubling financial institutions.
- The debate over the mechanics of an agreement to fund the U.S. government has become a political issue in the U.S.
- The lack of a cohesive economic plan is alarming and causing risk-adverse trading, and likely making the USD stronger in the near-term as financial institutions grow nervous.
Speculators who have pursued selling positions as a habit with the USD/MXN, and want to continue should be conservative in the near term. The potential of the USD/MXN to resume its lower trend and challenge its support levels touched a week ago is intriguing, but may prove difficult to achieve in the short term. Traders should be ready for choppy conditions over the next couple of days as financial institutions prepare for the text of the FOMC Meeting Minutes, and hope for clarity regarding U.S Federal Reserve interest rate policy and the debt ceiling concerns.
USD/MXN Short-Term Outlook:
Current Resistance: 17.78100
Current Support: 17.74300
High Target: 17.86200
Low Target: 17.67400
Ready to trade our daily Forex forecast? Here’s a list of some of the best online forex trading platforms to check out.