The US dollar is trying to turn the tide against the Mexican peso at the moment, but I believe it will only offer a selling opportunity.
The US dollar currently finds itself hanging around the 17.27 Mexican pesos level, which we got here fairly quickly about a week ago and then have been grinding back and forth.
This does make a certain amount of sense as this is an area that has a lot of market memory attached to it. After all, it's where we bottomed in late February during the war and then shot straight up in the air.
Keep in mind that the USD/MXN pair is highly influenced by risk appetite and to a lesser extent, the global supply chain, as Mexico is the number one exporter to the United States and is considered to be an emerging market.
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The Role of Risk Appetite
Risk appetite comes into play here. The better the risk appetite is typically speaking, the further this pair will fall. It's worth noting that the 17 level below is a fairly significant support level and therefore a little bit of a bounce should not be a huge surprise. After all, this pair has fallen rather significantly over the last year and a half or so and therefore sooner or later you have to get a pullback.
That's exactly what I'm looking for here because you get paid swap at the end of the day if you short this pair. The 17.50 level above for me is a barrier that I think sellers probably defend. After that, we have the 50-day EMA at the 17.60 level. The 17 level being broken to the downside could open up 16.50, but right now I would rather have a little bit more room to maneuver with in this pair in order to start selling again. While I do believe that this is a market that eventually sees sellers come back, I just want to start shorting from a higher price.
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