The ability of the USD/MXN to trade lower and test support early yesterday was tested by two temporary reversals higher. The sudden burst of bullish behavior seemed to have been stimulated by two factors, the first being important lower support near the 21.25000 mark. The second reason for a move higher in the USD/MXN short term may have been caused by a thrust of risk-averse speculation. This occurred with US President Trump’s tweeted that another stimulus deal was not a certainty in a political gambit as negotiations with the Democrats became entangled.
Interestingly, the 21.25000 was likely the reason for the first move higher yesterday. The 20.82000 juncture lower was touched on the 18th of September, so there is more room to traverse downwards for the USD/MXN technically. However, the 21.25000 was probably viewed as a soft trading area for the forex pair because a move lower would have had to fill a less than full volume gap, which saw the USD/MXN climb higher on the 21st of September when risk-averse trading hit the markets taking the USD/MXN from 21.10000 to 21.30000.
Price action this morning has seen the USD/MXN regain some bearish momentum, yesterday’s high of 21.73000 as risk-averse trading conditions prevailed appear to be in the rearview mirror for now. The USD/MXN is trading within the 21.52000 vicinity and the 21.48000 level should be watched as a short term inflection point because this was the forex pair’s price when President Trump’s sudden burst of tweets were ignited and created another burst of trading higher.
Speculative positions within the USD/MXN remain highly motivated according to global risk appetite. Yesterday’s rather lackluster results on US equities were a response to political gamesmanship being played by Republicans and Democrats. Futures markets in the US early today are indicating a stronger opening and this could create a positive speculative environment for the Mexican Peso.
Selling the USD/MXN within its current levels should be done with limit orders which try to use slight reversals higher to try and capture downside momentum which could develop. Selling the USD/MXN between the 21.54000 and 21.60000 levels may prove to be a solid opportunity for traders who believe global risk appetite will remain steady near term.
Mexican Peso Short Term Outlook:
Current Resistance: 21.64000
Current Support: 21.48000
High Target: 21.73000
Low Target: 21.29000
