The USD/MXN is trading near the 16.97500 level as of this writing. Since Wednesday of last week when the USD/MXN was trading near the 16.70000 ratio, the currency pair has developed a rather solid move higher. However, day traders should keep this in perspective and acknowledge the USD/MXN is traversing within the lower depths of its long-term prices. The USD/MXN traded near the 16.69300 mark on Tuesday of last week.
The USD/MXN move higher in the past few days has correlated to the broad Forex market. Traders who believe the USD/MXN is suddenly going to develop a huge upwards amount of momentum should firmly question their conclusions. The USD/MXN has seen some of the strongest bearish trading of any major currency pair over the past three years. While the price velocity downwards will certainly eventually evaporate, this might not happen in the mid-term.
USD/MXN Short-Term Move Higher may be an Opportunity to Sell
Traders who are tempted to sell the USD/MXN on slight moves higher cannot be faulted. The 17.00000 should certainly be watched as an important psychological barrier for the USD/MXN, and if prices can be sustained beneath this level in the short term it may indicate additional behavioral sentiment is lingering within financial institutions which could take the currency pair lower. The U.S. Federal Reserve is likely to raise its interest rate on the 26th of July, this Wednesday, but this potential hike of 0.25% has been cooked into the value of the USD/MXN already.
What day traders and financial institutions both need to understand within the next few days is what the Fed’s FOMC Statement is going to say. The lack of clarity regarding the potential Federal Reserve outlook regarding future interest rate hikes has likely caused a good amount of cautious trading to build the past few days, which has likely helped the buying momentum of the USD/MXN increase slightly. However, if the Fed raises the Federal Funds Rate as anticipated, but shows a less aggressive outlook within its FOMC Statement, this could ignite USD/MXN sellers again.
Resistance near 17.00000 should be Watched Closely in the USD/MXN
- Resistance near the 17.00000 level should be used by day traders as a barometer of sentiment in the USD/MXN near term.
- The Fed’s rate decision and FOMC Statement on Wednesday may create rather choppy USD/MXN conditions until then, which opens the door for quick-hitting tests of support and resistance levels for wagers using conservative leverage.
USD/MXN Short-Term Outlook:
Current Resistance: 17.01100
Current Support: 16.96100
High Target: 17.05500
Low Target: 16.89990
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