The broad Forex market opened today’s trading with some anxious results, this as many major currencies lost value against USD centric strength. However, the USD/MXN has shown a rather moderate calm in early hours, but this may be due to a significant amount of Mexican Peso financial institutions not joining the Forex party quite yet. When Mexico opens for trading in the coming hours things may change when volumes increase in the USD/MXN.
Friday’s trading in the USD/MXN did see higher values tested and the 17.40250 vicinity was briefly tested, but since this early high the currency pair has shown a tendency to incrementally move lower. Nervousness about the conflict in the Middle East continues to radiate reactions in the broad markets. Yet, the opening of the USD/MXN has been rather muted and some selling has been generated.
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Energy Sales and the Mexican Peso
Mexico is a large producer of Crude Oil. While not the biggest, Mexico does have an ability to export energy. The tensions in the Middle East and concerns regarding the Strait of Hormuz navigation for oil tankers remains a real concern. Higher Crude Oil prices while certainly a dynamic part of inflation, may also cause growing demand for Mexican Crude Oil supplies.
Financial institutions have made the USD/MXN rather bearish since late March when the 18.00000 realm was flirted with momentarily. The return to the current values in the USD/MXN have brought the currency pair back to prices seen in very early March. The price of the USD/MXN before the start of the Iranian conflict was near 17.17000 – on the 27th of February.
Speculative Wagers and Near-Term Consideration
Day traders will have to monitor the short-term nervousness being seen in the broad Forex market. While many other major currencies have lost a small dose of value to the USD in early hours, the fact that the Mexican Peso has held firm is of interest.
Does this mean when bigger volumes develop in the coming hours the USD/MXN will correlate to broad market nervousness, or will the Mexican Peso hold its value and continue to show an ability to move lower?
Volatility is likely in the near-term as financial institutions globally try to gauge their outlooks via near and mid-term considerations.
Two different viewpoints are likely due to the perception that the Middle East conflict could change rapidly this week and into the coming months.
Forex has proven fast and violent the past couple of days and today and tomorrow are likely to remain rather feverish in the USD/MXN.
USD/MXN Short Term Outlook:
Current Resistance: 17.30600
Current Support: 17.29050
High Target: 17.36500
Low Target: 17.24900