The USD/MXN has sustained its downward trajectory and established a significant bearish trend since the beginning of August. There have been some hiccups along the way, but the USD/MXN has also demonstrated a rather solid downward move since late March when it was trading near 25.37000. The USD/MXN saw bullish trading dominate in June; its value range was 21.45000 around the 8th of June to a high of 23.14000 on the 30th of June. However, this cycle of June price action has seen a total retracement to lower values and broken support levels again.
The USD/MXN does produce volatility and speculators must keep this in mind. The forex pair is a key barometer of global risk appetite, and also reacts quickly to the dynamics of North American economic developments and politics. The bearish cycle which has clearly been displayed since the start of August has been delivered as risk appetite has been strong and optimistic investor sentiment continues to show signs of sustaining worldwide.
However, words of caution need to be raised; Mexican equities are still down over the past calendar year as concerns about domestic economic conditions in Mexico dominate. This should highlight that the trading of the USD/MXN has plenty to do with US Federal Reserve policy and that the weakened stance of the USD mid-term is because of Fed mandates which have helped create the bearish trend for the forex pair.
As the USD/MXN sustains values near important support levels the 21.00000 level is in focus. Trading yesterday did produce a move downwards to the 20.90000 mark, but a reversal developed when bearish momentum could not be sustained. The 21.00000 is an important psychological mark for the USD/MXN and if this support level can be broken lower and sustained, the next critical test would be 21.81000. On the 15th of September, the USD/MXN also broke through the 21.00000 level also, but it also produced a reversal higher too.
Significantly, the resistance levels for the USD/MXN have proven adequate short term, they have also incrementally decreased. The reversals higher short term has not proven violent. Current resistance near 21.17000 should be watched, if this higher level remains intact, the USD/MXN could see more downward momentum develop short term. Selling the USD/MXN and looking for short term trades trying to take advantage of the forex pairs bearish trend remains a solid choice.
Mexican Peso Short Term Outlook:
Current Resistance: 21.17000
Current Support: 21.01000
High Target: 21.25000
Low Target: 20.81000
