The USD/MXN fell from its highs on Thursday and continued to incrementally selloff on Friday after the President-elect named perceived pro-business Marcelo Ebrard as Economic Minister.
- After trading at a high of nearly 18.47700 on Wednesday, and above that ratio earlier last week, the USD/MXN pair began to incrementally selloff.
- The currency pair did not challenge highs last week which had been seen on the 12th and 13th of June when financial institutions displayed extreme nervousness because of political implications, so it can be suggested fear is starting to erode among larger USD/MXN traders.
- The USD/MXN sold off well on Thursday and Friday of last week and the currency pair is now around the 18.12915 mark as of this writing with fast price action being seen.
President-elect Sheinbaum named Marcelo Ebrard, a political opponent of Sheinbaum in the recent primary election process within the Morena political party. The incoming Economic Minister for Mexico will take on his duties when Sheinbaum assumes power in October of this year. The naming of Ebrard, who has been the mayor of Mexico City in the past, calmed financial markets which see him as a pro-business politician. The USD/MXN went from around the 18.43300 ratio to 18.08000 by the end of Friday.
USD/MXN Concerns Linger and Price Action Potentially Reactionary Still
Speculators should not get too comfortable with the naming of the Economic Minister, because concerns continue to linger regarding the potential of judicial reforms in Mexico. Financial institutions may have sold off the USD/MXN on Thursday and Friday, but the currency pair remains within elements of a higher price range. The USD/MXN is essentially trading near prices last traded in October of 2023. Nervous sentiment remains a threat in the USD/MXN.
The ability to selloff going into last weekend and the ability to maintain the lower realms of its near-term price range this morning may be viewed as positive by bearish sellers, but resistance around the 18.15000 to 18.20000 ratios should be watched. If the USD/MXN is able to maintain values below these levels it may signal some financial institutions believe the USD/MXN remains in overbought territory, but this is speculative and day traders need to be careful. The potential of more volatility in the USD/MXN has not disappeared quite yet.
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USD Centric Thoughts for Near-Term USD/MXN Trading
The coming two days will likely remain a test of USD/MXN value because of sentiment being generated from within Mexico due to political considerations. Short-term choppiness should be expected in the currency pair.
- However, on Thursday of this week the U.S will release GDP numbers which will create impetus for Forex including the USD/MXN and likely put the currency pair within the grasp of a correlated marketplace.
- Speculators should look for quick hitting trades in the USD/MXN in the short-term and use solid risk management, looking for downside may be tempting but it could prove dangerous.
USD/MXN Short Term Outlook:
Current Resistance: 18.13300
Current Support: 18.08900
High Target: 18.16200
Low Target: 18.00100
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