The USD/MXN has provided traders with a rather entertaining display of rapid shifts in value the past month. The Mexican Peso has tested important short term support then has reversed higher, and turned around again and promptly tested resistance. As of this morning, the USD/MXN is challenging support levels below and the 21.50000 ratio looks to be an inflection point. If the support level is broken lower and trading is sustained with selling, speculators may look at the mid-September values of the USD/MXN as a perceived target.
Trading within the USD/MXN has been a consistent reflection of global risk appetite. The month of September and early October has provided dynamic fireworks regarding investor sentiment which traders need to consider. The rapid shifts in the value of the USD/MXN reflect the rather fragile nature of financial markets and investing. As the Mexican Peso has renewed its bearish trend lower the past week of trading, speculators have certainly been challenged.
If the 21.50000 support level proves vulnerable, traders will eye the 21.30000 zone as a logical value target. Trading within the US and Mexican equity indices yesterday were positive and early calls from the future markets indicate further potential gains.
Mexico remains a nation with a troubling economic outlook considering the implications of coronavirus. Organized protests are being seen in the nation as the government’s handling of the crisis faces increased criticism. However, on the other hand, the USD/MXN has shown the ability to recover from its high watermarks of March and April and present a fairly consistent bearish trend downward.
Speculators need to note that the USD/MXN was trading below the 21.00000 in the middle of September. Traders therefore may be tempted to believe another test of lower values within the forex pair are merited, but they should also remember the rather capable volatility the USD/MXN can provide which can prove dangerous to trading accounts when trades go the wrong direction.
The ability of the USD/MXN to create trends based on global risk appetite remains appealing for speculators. If investors continue to dip their toes into the markets and search for positive short term momentum, it may help sellers of the USD/MXN pursue lower values below. Selling the USD/MXN on pullbacks higher to the 21.55000 to 21.60000 levels with limit orders may produce worthwhile opportunities near term. Risk reward scenarios short term, do seem to favor a bearish outlook.
Mexican Peso Short Term Outlook:
Current Resistance: 21.75000
Current Support: 21.50000
High Target: 22.06000
Low Target: 21.30000
