The USD/MXN has correlated to the broad Forex market early on Monday and is showing financial institutions are leaning slightly into USD centric strength. The Iranian war which has enjoyed a ceasefire for almost two weeks is showing fragility as the U.S White House and Iran appear to be increasing rhetoric aimed at each other, and this is making global markets nervous.
The USD/MXN climbed quickly this morning, yet it wasn’t an extremely violent spike, and is near the 17.36200 ratio with a wide spread being demonstrated. The move higher isn’t surprising considering the rise in noise that has developed since Saturday in the Middle East. The USD/MXN did touch a low of nearly 17.12700 on Friday, before climbing back higher and going into the weekend near 17.31450.
Stronger Mexican Peso But Choppy Conditions
The past month and a half in Forex have provided day traders with dynamic conditions. Velocity and reversals have been frequent and things certainly are not going to change in the short or near-term. The USD/MXN is within the lower realms of its long-term realm and has definitely shown an ability to move lower. But hurdles now stand in the way.
The Iranian war has certainly not helped build positive momentum regarding mid-term clarity for business endeavors and this has created headwinds for the USD/MXN. The Federal Reserve is set to hold its FOMC meeting next week and release its results next Wednesday, but the reality is that the Iranian war will remain the focus. The distance between the lows of Friday and this morning’s early highs shows anxiety of the unknown has come into the USD/MXN again.
Waiting for the Next Big Wave of Impetus
Day traders should remain cautious today and tomorrow in the USD/MXN. If a speculator wants to bet on the currency pair and has deep pockets, well then pursuit of wagers may turn out to be quite exciting over the near-term – but will they be profitable?
To increase odds in the favor of winning bets in the USD/MXN, it is suggested that risk management be used, but monitoring the situation in the Middle East too.
As a barometer the cost of WTI Crude Oil can be used as a tool, if the commodity is climbing in value, it likely means risk adverse trading in Forex will heighten, meaning the USD/MXN could be going higher.
It may get boring to say conditions depend on what is happening in the Iranian war, but it is likely the key bit of information all financial institutions are watching at this moment.
Looking for lower prices in the USD/MXN may feel logical, but some positive impetus will have to influence large players in order to become more optimistic about short-term conditions – this to create sustained momentum that can be taken advantage of by speculators.
USD/MXN Short Term Outlook:
Current Resistance: 17.36920
Current Support: 17.35100
High Target: 17.40300
Low Target: 17.31850