Speculators who enjoy short-term movements and following incremental technical trends may have found the past two days of trading within the USD/MXN worthwhile. The Forex pair is sustaining a tight range while it straddles critical support levels, but fails to puncture the juncture of 20.20000 lower in any strong manner. This has allowed some traders undoubtedly to pursue speculative trades which try to capture small changes within the USD/MXN, as it creates a rather consolidated playing field.
Impetus is being awaited seemingly in order to create the next ‘big’ move of the USD/MXN. Speculators may be intrigued by the ability of the Mexican peso to sustain its stronger value against the USD the past two days without suffering a strong reversal upwards. Global equity indices appear to have taken a breather the past two days, but major stock exchanges led by the US markets continue to stay aloft at their higher levels even as mixed trading has been highlighted. Profit taking within the major equity indices has not been violent, which may prove to be evidence that a period of accumulation is taking place as investors wait for the next dynamic move.
Risk appetite correlation via global indices and the USD/MXN is important because the Forex pair has a solid history as proving to be a barometer regarding investor sentiment. As the USD/MXN hovers near important support levels without suffering a major reversal and does not challenge key resistance levels, traders may be inclined to look at technical charts of the Forex pair and suspect the next dynamic move may be more bearish activity.
Clearly, the USD/MXN does not have to pursue better values for the Mexican peso. However, bearish sentiment has been strong and the trend of the Forex pair has demonstrated ability to trade lower. Speculative positions seeking further bearish momentum cannot be faulted.
Resistance levels may prove to be adequate stop loss ratios for the USD/MXN, but in order for the Forex pair to sincerely see another burst of bearish trading it is possible speculators will also have to see optimistic buying on global equity indices, meaning the US stock exchanges predominantly. Cautious amounts of leverage should be used as the USD/MXN trades within its consolidated range, but looking for values to test support levels near the 20.20000 mark appear to be justified.
Mexican Peso Short Term Outlook:
- Current Resistance: 20.43000
- Current Support: 20.19000
- High Target: 20.54000
- Low Target: 20.00000
