The US dollar has been falling against the Mexican peso for some time, but the occasional bounce continues to be a thing in this market. That was the case for Wednesday.
USD/MXN
The US dollar has rallied a bit against the Mexican peso during the trading session on Wednesday as it looks like we are in fact going to try to find our way closer to the 17.50 level.
The US dollar is fighting back against multiple currencies, and as a result, it is not a huge surprise to see a little bit of a gain here. But when you look at the overall trend, you can see that we are most certainly in a downtrend, and I think we are looking for signs of exhaustion that we could start selling into.
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The recent numbers, the manufacturing PMI and services PMI numbers coming out of the United States, have been stronger than anticipated and that of course is a very bullish sign for the US economy, which by extension is a very bullish sign for the Mexican economy.
The 17 Peso Target
This is why I am looking for signs of exhaustion to start shorting and, of course, we also get paid to hang on to this market to the downside. The 17.50 level is an area that I think a lot of people will be cognizant of as a potential barrier, and if we were to break above there, then you have the 50-day EMA near the 17.79 region.
The 17 Mexican peso level underneath is still my target and I still think we get there given enough time. A little bit of patience probably goes a long way here and therefore I like the idea of staying in short positions over the longer term as we have. We could go down to the 16.5 level over the next several months.