The USD/MXN has moved above the 20.00000 mark since last night as financial institutions brace themselves for the US Federal Reserve’s FOMC policy statement. However, taking into consideration the amount of nervousness which has been demonstrated in Forex, the USD/MXN has not run amok and is still within the vicinity of its rather strong long-term bearish range. The move higher in the past day via the USD/MXN may actually prove to be an opportunity for technical traders.
The USD/MXN may continue to flirt with nearby resistance, and the 20.10000 juncture is certainly within sight and an important psychological barometer. But it should be remembered by traders that the USD/MXN was trading above the 20.10000 mark essentially from mid-February until the middle of April. The question is if bullish momentum is about to resume its mid-term dynamics and mimic the gyrations from that time period or if the Forex pair will again begin to show that its bearish momentum is the greater force.
Speculators can expect plenty of volatility in the short term and technical traders will need to use their risk management tools wisely. Conservative traders may want to wait until the US Federal Reserve makes its pronouncements later today to stay out of trading waters which certainly will prove swift, but aggressive speculators may decide to put their wagers on the USD/MXN beforehand.
Traders should be careful not to use too much leverage today, because if the USD/MXN does move quickly, a large wager could become destructive to trading accounts. Speculators who believe that the USD/MXN has traversed too high may want to be sellers of the Forex pair, but they might want to practice caution and use limit orders above current price levels to activate their short positions.
The USD/MXN above the 20.10000 mark may be overbought, but short-term sentiment will be put to the test as traders navigate the predictions and results of the US Fed’s FOMC release. Traders who want to sell the USD/MXN and believe that values seen on the 26th of April near the 19.78000 juncture will re-emerge are encouraged to practice caution in the short term. The use of take-profit and stop-loss orders will be important during the next twelve hours as volatility is exhibited.
Mexican Peso Short-Term Outlook:
Current Resistance: 20.10500
Current Support: 19.98000
High Target: 20.15600
Low Target: 19.86000
