- The US dollar initially did try to rally a bit against the peso, but the US dollar had a horrible session on Tuesday, as it looks like traders are doing everything, they can to get rid of it.
- The 18.50 Mexican pesos level should continue to be of importance as it has been support and resistance multiple times in the past.
- So, I think you've got a situation where traders will continue to look at this as a potential floor.
But if we do break down below the 18.50 level, then it opens up a move down to the 17.75 level, which was a swing low previously. Ultimately, I don't really see much stopping that from happening, but we may get the occasional bounce. Those bounces obviously are selling opportunities at this point, as the interest rate differential favors the Mexican peso.
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And of course, we just have plenty of grinding momentum to the downside. The 50-day EMA is currently sitting right at the 19 pesos level. So that's something worth noting, as it is a large round psychologically significant figure and almost certainly will attract a certain amount of attention anyways.
I Remain Bearish Biased Here
So, with that being said, I like the idea of shorting this market on short-term rallies. As far as hanging on to a short, that might be a little bit more difficult, but it is possible, I suppose. Ultimately, I do believe that we are looking towards the 17.75 level, but in this respect that can take quite some time. Exotic currency pairs are a little bit different in the sense that you need to really hang on to the swings. They're not for short-term trading, so keep that in mind if you get involved in this pair, as it can move slowly.
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