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USD/MXN Shows Strength on a Very Illiquid Session - 8 September 2015

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The USD/MXN pair rose during the session on Monday, as the markets continue to favor the US dollar in general. This is a very highly sensitive market when it comes to the oil markets, as the Mexican peso is essentially known for two things: being a proxy for oil, and of course a proxy for Latin America in general. With this, the market looks as if it should continue to favor the US dollar in general, as we are at massive highs right now. The fact that we were able to break over the high from the last several sessions suggests that oil markets will continue to put a bit of pressure on this pair.

Even if we fall from here, I feel that there is a significant amount of support somewhere near the 16.68 handle. With that, I would look at pullbacks as potential buying opportunities, as the US dollar of course represents not only safety, but an economy that is expanding. With that, it makes sense that the US dollar will continue to climb against riskier currencies such as the Mexican peso.

Back to the highs

We should go back to the highs soon, as this market certainly has been a nice uptrend. This is a trend that has been very strong recently, and with that it’s only a matter of time before we reach towards the area again. The 17.30 level offered quite a bit of resistance previously, but quite frankly on the longer-term charts it serves no real purpose. It is just simply where we pulled back.

I feel that this market will continue to respect not only the strength of the US economy, but the fact that the Mexican economy is tepid at best, and of course there are massive amounts of political concerns when it comes to Mexico itself. With this, we should continue to see the buyers take control this market and although it is a fairly exotic pair, I do like this trade to the upside.

USDMXN

Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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