The USD/MXN has mirrored global markets and its bearish trend has been fully reignited as support levels come under pressure. In early trading this morning, the Mexican peso continues to sustain its value and speculators should be prepared for further tests of important values below regarding the USD/MXN.
The forex pair certainly saw a strong dose of caution develop last week, but the price action of the USD/MXN was predictable. As the results from the US election became clear, the Mexican Peso surged against the US dollar like many other currencies. Speculators may question the ability of the USD/MXN to sustain this solid short-term trend, but they should also take into consideration that next week may produce rather exuberant displays of risk appetite which could propel the forex pair to lower depths.
The current value of the USD/MXN is testing values not traded since March of this year. Many other currencies are within a similar position against the USD, as financial institutions show a desire to buy into global equity indices short term. Support near the 20.27000 level looks appropriate, but it should be noted that this level was last seen as the USD/MXN began to succumb to bullish momentum created by coronavirus fears.
Support levels now within target for speculators may prove vulnerable if tested because they were not solid battlegrounds and were merely part of a launching ground as investors became frazzled by economic concerns regarding the pandemic as it was unleashed globally. These support levels could be brushed aside quickly if risk appetite remains strong and financial houses try to anticipate the coming months and year as US President-elect Biden prepares his policy agenda.
Short-term speculators may be skeptical of the strong bearish momentum the USD/MXN has displayed, but they need to also recognize the coming days may produce more tests of support levels with an extra dose of over exuberance swirling. Selling the USD/MXN on small reversals higher and seeking values below may be a worthwhile speculative position near term. Support levels may continue to be tested and if strong volumes come into forex these price ratios may prove vulnerable because of bearish momentum.
Mexican Peso Short-Term Outlook:
Current Resistance: 20.65000
Current Support: 20.27000
High Target: 20.90000
Low Target: 20.09000
