- The US dollar has been very choppy during trading on Thursday as we continue to see a noise around the 18.35 MXN level.
- This is a market that has seen quite a bit of trouble just above, and the volatility and choppiness certainly seems to be affecting this market from a technical analysis standpoint.
- As I look at this chart, it will be an interesting thing to pay close attention to whether or not we can continue the momentum to the upside, and I think Friday might end up being one of those inflection points that you need to be cognizant of.
Federal Reserve
The Federal Reserve will be front and center obviously, and with the Core PCE Price Index numbers coming out on Friday, a lot of traders will be trying to guess what the Federal Reserve is going to do next when it comes to monetary policy. With that being the case, I do expect a lot of volatility during the day on Friday, and ultimately it could end up being a major inflection point in the USD/MXN pair. It’ll be interesting to see how this plays out, with the Core PCE Price Index expected to be 0.1% month over month. Anything hotter than that could have the US dollar spiking against the Mexican peso, perhaps running to the 19 MXN level.
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From an USD/MXN forecast point of view, on a short-term pullback, I believe that the 18 MXN level is going to be supportive, and then after that we have the 50-Day EMA coming into the picture near the 17.65 level. That being said, the market has recently seen a lot of upward momentum, so one would have to assume that there is at least going to be a little bit of interest in this dip. However, if we were to break down below the 50-Day Exponential Moving Average, the market is likely to drop toward the 16.60 MXN level underneath, where we had lunch from previously.
Breaking above the 19 MXN level opens up the possibility of going all the way to the 20 MXN level, which obviously has a lot of trading psychology attached to it. With that being the case, the market is likely to continue to see a lot of questions asked of it, and I think Friday will give us some of the answers.
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