- During the trading session on Friday, we have seen the US dollar rally quite a bit against several currencies, and the Mexican peso wasn’t any different.
- We had formed a shooting star during the Thursday session, and it looked as if the US dollar was going to continue to fall, but we have seen a certain amount US dollar strength across the Forex world.
- As things close on Friday, we are looking at the 50 Day EMA above, which of course could be a significant resistance barrier given enough time.
If we were to break above the 50 Day EMA, then the US dollar probably goes looking to the 20.50 MXN level. Anything above opens up the possibility of a move to the 21 MXN level after that. That being said, it’s also very likely that we will see a little bit of exhaustion here, and if we do see the US dollar struggle against disease around the world, then we could make a run toward the recent low near the 19.80 MXN level. Anything underneath there could have the US dollar falling, and I think the Mexican peso might be in a little bit better position than some other currencies around the world when it comes to dealing with the US dollar.
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The situation between the United States and Mexico is cooling off quite a bit, and that does help the Mexican economy. That being said, the Mexican economy is highly dependent on the United States, so if we see a situation where the two governments are working together, then you have a real shot some normalization in this currency pair. Remember, the interest rate differential favors the Mexican peso over the US dollar, and Mexico makes quite a bit of economic growth from selling products and shipping them to the United States. In other words, the better the Americans do, assuming that the trade tensions are dissipating, the better the Mexican peso will do.
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