- The US dollar has rallied rather significantly during the course of the trading session on Wednesday as we are now trying to break above the 50-day EMA.
- All things being equal, this is a market that I think continues to see a lot of noisy behavior with the market consolidating after a huge move higher.
- The 20 Mexican peso level underneath is a massive support level while the 21 peso level above is a massive ceiling.
This is a market that has been consolidating and trying to work off some of this excess for a couple of months now. And I think more importantly, this is a pair that is currently waiting to see what happens with tariffs.
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After all, it does seem like the Mexicans are doing quite a bit to make the Americans happy. So, it's possible that Mexico gets a little bit more of a reprieve, but we just don't know how it's going to play out yet. Furthermore, one thing that is a little bit normal with the fundamental analysis is the fact that the Mexican economy is slumping. So, tying all of that together, it does make sense that the US dollar would continue to strengthen against the Mexican peso. And furthermore, we have real questions about migration.
A Unique Currency Pair
What makes the dollar against the Mexican peso a unique currency more than anything else is the fact that so much of it gets sent across the border in remittances. Migrants come over to America, work, send half or more of their money back into Mexico, creating demand for Mexican pesos. You wouldn't think it would be a huge deal, but when you're talking about millions of people, it does add up over time. With that being said, I think this is a situation where we are still very much range-bound and probably holding our collective breath in order to see what happens next.
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