The past couple of months that the USD/MXN showed signs of building momentum lower have almost vanished in the past few weeks, this as the Iranian war enters continues to grind on. The USD/MXN in early trading this morning is seeing fast price action and challenging higher ratios, this as the 18.00000 clearly gets fought over. Financial institutions went into this past weekend nervous and nothing has changed.
Day traders who look at the USD/MXN and believe it is overbought may be proven right eventually, but they might not find solid long-lasting momentum lower in the near-term. Choppy nervous conditions remains prevalent and are unlikely to suddenly disappear. The USD/MXN was trading near lows around the 17.71000 vicinity on Thursday and Friday. And then another round of selling hit U.S equity indices and risk adverse investors piled into USD assets like Treasuries.
Wide Spreads, Fast Results and Wagering
Speculators need to understand that pursuit of the USD/MXN could prove opportunistic, certainly if they are able to catch a chosen direction that is correct. However, the USD/MXN is now within values seen in December and January. Shifting sentiment is being hit continuously with news developments which are effecting outlooks.
While some traders certainly might be correct about higher energy prices being able to help Mexico’s economy mid-term, the knock on effects from potential inflation and less opportunistic global commerce is scaring financial institutions. Concerns about outlook are starting to seep into mid-term thinking and this is causing investors to look at complicated USD centric implications. The USD/MXN is correlating with the broad Forex market, the Mexican Peso’s strength long-term for the moment needs to be treated cautiously.
Near-Term Pursuit and Choppy Conditions
The USD/MXN may feel too high if it lingers above 18.00000. However, selling the USD/MXN and looking for lower price action in the short and near-term should be done conservatively and with nearby targets. Attitudes among USD/MXN large players remains nervous and they are unlikely to lean into positions strongly to the downside.
No amount of wishful thinking is going to cause a reversal in the USD/MXN downwards, unless there is genuine optimistic sentiment that is generated.
The Iranian war appears ready to linger into this week and financial institutions remain transfixed on developments and outlooks regarding the conflict.
The USD/MXN should be traded with solid risk management and folks need to adjust their sentiment about price direction.
USD/MXN Short Term Outlook:
Current Resistance: 18.02000
Current Support: 17.97800
High Target: 18.08100
Low Target: 17.90700