USD/MXN Analysis: Tight Price Range Correlates to Global Forex Market

The USD/MXN has seen downward momentum since early last Friday, and as of this morning the currency pair is trading near the lower depths of its price range.

  • As of this writing the USD/MXN is near the 17.07100 price level.
  • On Friday of last week a high around the 17.17495 ratio was challenged, which touched and traded slightly higher than the previous day’s apex price.
  • However, after hitting higher near-term values late last week the USD/MXN started to see incremental selling.
  • Price action in the USD/MXN correlated well with many other major currency pairs which saw a sudden burst of weakness emerge in the USD late last week.

USDMXN Analysis Today - 12/02: Forex Correlates with USD/MXN (Graph)

The price range of the USD/MXN last week was rather polite, its highs stayed below the previous week’s apex values, but its lows penetrated to further depths. This price action in the USD/MXN suggests that behavioral sentiment started to lean towards bearish sentiment. Today’s trading may continue to test the known range which has been seen in the past handful of days, but there are intriguing considerations to be made by short-term speculators.

USD/MXN 17.10000 Ratio and U.S Inflation Data

Having stayed under the 17.10000 level in early trading this morning shows there was a lack of a strong reversal today after Friday’s selloff. This suggests that financial institutions may be comfortable with a more bearish USD/MXN outlook short-term. However, the near-term is likely to still see plenty of choppy conditions because large players remain nervous about current price equilibriums, particularly as they await impetus which is certain to cause volatility in the USD/MXN and broad Forex market.

The U.S will release Consumer Price Index data on Tuesday and the results will affect the USD/MXN. Before and after the inflation statistics are released day traders should expect to see the price range of the USD/MXN widen.  If U.S inflation is stronger than forecasted this could spark some bullishness in the USD/MXN. If the numbers meet expectation or come in lower, the USD/MXN could see additional selling build.

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More Data Later this Week and the Chance for Additional USD/MXN Volatility

The comfortable price range of the USD/MXN is a healthy sign for day traders, but the knowledge that additional economic reports will come from the U.S later this week also will potentially cause a wider price range to be tested as behavioral sentiment shifts. However, day traders who are technically inclined may find that support and resistance levels act as key barometers regarding trends short-term.

  • If the 17.05000 level is penetrated lower it could mean another test of the 17.03000 level will be seen.
  • If the higher ratios near 17.13000 to 17.14000 are challenged again, it could set up a test of loftier values seen earlier in February.

USD/MXN Short Term Outlook:

Current Resistance: 17.08600

Current Support: 17.06100

High Target: 17.14600

Low Target: 17.03700

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.