Resistance levels within the USD/MXN continue to look vulnerable short term as trading has become rather risk adverse and the forex pair trends higher. While the USD/MXN is still enjoying long term bearish momentum and created solid values for the Mexican Peso taking into consideration the impact of coronavirus in the nation, risk sentiment has certainly turned cautious the past few trading sessions as tension grows because of the US election which will take place tomorrow.
As recently as the 27th of October the USD/MXN was challenging the 20.85000 juncture which was last really battled over and traded in early March when the forex pair started a significant bullish trend in the early days of coronavirus fears because of its economic implications. However, as the US election approaches with an unknown result, investment houses are now positioning themselves in a conservative manner as they brace for the outcome. Short-term resistance levels have been broken higher by the USD/MXN.
In early trading this morning a small reversal lower has been experienced and speculators need to keep in mind that market volatility may be transcendent in the coming days. Reversals which appear sharp and swift price movements are certain to be demonstrated within the USD/MXN as a fair market value is fought over. The next twenty-four hours may produce movements within the forex pair which demonstrate evidence of pre-positioning before the US election winner is declared. Very late on Tuesday and early morning Wednesday fireworks will be seen in the financial markets and traders need to be prepared.
The USD/MXN will not be immune to the sudden volatility which will be seen. However, speculators certainly will want to be ready to take advantage of market movements which emerge. Higher levels may continue to be tested short term and traders may seek buying positions of the USD/MXN with targets near these resistance levels in place with take profit orders, but speculators should also be ready for sudden reversals lower to emerge.
The USD/MXN is affected by market psychology in a large manner and the outcome of the US election is certain to create huge amounts of impetus. Near term the USD/MXN is likely to see swift movement and a test of resistance levels; however, after the US election, the forex pair may resume a rather demonstrative bearish trend and establish a solid reversal lower.
Mexican Peso Short Term Outlook:
Current Resistance: 21.42000
Current Support: 21.11000
High Target: 21.75000
Low Target: 20.95000
