A move down on Thursday in the USD/MXN extended an incremental trend, and transformed into strong velocity towards mid-term support levels which have sustained lows.
- The USD/MXN has sustained lower values as this morning has opened in Forex.
- The currency pair has achieved a solid downwards path since the 25th of April and the motion was extended last week.
- Then on Thursday the 9th of May the USD/MXN slid to a low of nearly 16.75100. And then on Friday the currency pair continued to prove bearish sentiment remains in force as a depth around the 16.71880 ratio was tested briefly.
The USD/MXN has correlated to weakness in the USD within the broad Forex market, but has also highlighted the currency pair has been able to consistently produce bearish moves lower after reversals higher have been seen. Once again the USD/MXN is within sight of important mid-term price levels. Technical traders looking at a three month chart may perceive the 16.80000 has worked as a barometer regarding risk appetite. The ability of the USD/MXN to sustain value below this level should be monitored today and tomorrow.
USD/MXN Lower Trend and U.S Inflation Reports Loom
While the USD has shown weakness as larger players in Forex seemingly have shifted their mid-term outlooks again regarding the U.S Federal Reserve, behavioral sentiment producing selling of the USD remains fragile in the short-term and remains vulnerable. The USD/MXN has maintained its lower values this morning and will likely demonstrate choppiness within a limited range today, but dynamics will change tomorrow.
The U.S will release Producer Price Index numbers on Tuesday and Consumer Price Index data on Wednesday. These reports will be crucial and affect short-term sentiment and cause volatility depending on the results. If the inflation data comes in weaker than anticipated this could set the table for the USD/MXN to challenge lower depths.
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USD/MXN Price Velocity and Speculative Notions
The USD/MXN will likely remain extremely speculative leading up to the U.S inflation reports. Day traders tempted to wager on the outcome of the PPI and CPI results can certainly do so, but using risk management will be essential to protect against moves that go against chosen directions. Reversals will certainly be seen in the USD/MXN with fast price velocity as the currency pair touches important ratios that have been preprogramed to react depending on the outcomes of the inflation reports.
- Day traders looking for additional downside should not only use stop losses, but take profit orders will help capture momentum and profitable trades before they vanish into thin air.
- The temptation to wager on the 16.75400 to 17.71900 looks appealing, but risk taking tactics need to be strictly practiced.
USD/MXN Short Term Outlook:
Current Resistance: 16.77900
Current Support: 16.75800
High Target: 16.83100
Low Target: 16.70900
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