- The US dollar has rallied a bit during the trading session here on Monday, showing signs of strength yet again. However, we did find a bit of difficulty at the 18.5 MXN level, which is an area that is starting to become very familiar for traders.
- It was previously significant support, and now it is offering significant resistance. By doing so, it looks like the market is going to continue to be very noisy and very cognizant of this area, so I think you need to pay close attention to 18.5 MXN going forward, as it has already proven itself multiple times, and now we have a massive downtrend line as well as the 50 Day EMA hanging around the same area.
Trend
The overall trend in this market is very negative, which does make a certain amount of sense considering that the US economy is strengthening, and of course, Mexico is the world’s largest exporter to the United States. In other words, if the US economy is strong, then the Mexican economy will be as well. On the other hand, if we start to see the US slow down a bit, then you have a situation where the Mexican economy will suffer, and ironically, it would end up benefiting the US dollar, although the US economy itself is in trouble. This is a little bit of a different type of market, so with that being said, you always have to keep that in mind.
I believe at this point, it’s likely that we will continue to fade rallies going forward, as we have seen multiple times. If we can break down below the 18.20 MXN level, then I think the market starts to fall toward the 18 MXN level. Anything below could open up the floodgates for even more increased selling. Keep an eye on whether or not we are getting US economic data, because the US government of course, is shut down, but as things stand right now, it looks like we are ready to go lower.
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