Financial institutions continue to deal with volatility in the Forex market and the USD/MXN has correlated to the growing optimism that has been sparked the past few sessions. The USD/MXN is near the 17.19200 vicinity as of this writing as it enjoys selling activity that is sustaining lower momentum based on the a couple of developing notions in the global markets.
The potential Iranian agreement has certainly ignited global markets towards optimistic thoughts the past couple of trading sessions. The USD/MXN is within its lower mid-term price realms, and day traders may believe large players have their eyes on lower targets per six month charts. However, before speculators bet blindly on momentum downwards they should make sure they can endure potential reversals upwards that can inflict harm.
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Trying to Gauge a Clear Path with President Trump
Financial institutions have grown accustomed to President Trump’s ability (skill and flaw) of causing whipsaw results via his rhetoric which sometimes suggests a change of thinking in a matter of days and sometime hours. Therefore, while the Iranian agreement has been promised by the U.S White House, day traders need to brace for the potential of rapid surprises developing which can change sentiment.
The U.S Federal Reserve will release its FOMC decision this Wednesday. Higher fuel costs have sparked inflation, but the Fed may not raise interest rates. If the Federal Reserve stays dovish and believes energy costs will come down because of the potential agreement between Iran and the U.S, this could spark a lower USD/MXN and a test of values seen in mid-February when the 17.10000 mark was penetrated.
Speculative Environment and the USD/MXN
Trying to predict what is going to happen in the short and near-term is very dangerous in Forex. Trying to find momentum and taking advantage of trends remains a logical goal for day traders.
The USD/MXN was in a rather bearish trend up until the Iranian war started in late February and early March.
If the conflict is realistically ended and an agreement is formalized in the coming days it will spark additional optimism.
The question is how low the USD/MXN can move in the near-term considering its large amount of selling seen the past few trading sessions – in other words some large players have already acted in the Forex market.
Day traders may expect additional moves lower and they may take place, but the move will not be a one way avenue.
Looking for quick hitting targets that take advantage perhaps of slightly higher moves which will spark a reaction could be a way for speculators to attack the USD/MXN with short-term wagers.
But trying not to get knocked out of positions by reversals that endanger stop losses remains problematic for traders with limited cash and high leverage.
USD/MXN Short Term Outlook:
Current Resistance: 17.19900
Current Support: 17.19010
High Target: 17.22300
Low Target: 17.14600
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