- The US dollar has rallied a bit during the trading session against the Mexican peso (USD/MXN pair) as we continue to see a lot of noise.
- We are apparently trying to defend the 18 pesos level, so that might be something worth paying attention to, but it's also worth noting that this is a pair that features you paying swap for going long.
It's not to say that you can't because this pair certainly moves rather quickly, but it's also a risk on, risk off type of situation. If we do have more risk off, then the US dollar will continue to climb. However, later in the day, we are starting to see a little bit of stagnation in the greenback, so we may continue to see a lot of noise in general.
19 Pesos Could Be Crucial
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Above, we have the 19 pesos level offering significant resistance, and if we can break above there, then it's likely that we could go much higher. If we were to break down below the 17.75 level, then I think we would probably see this market drop down to the 200-day EMA. In general, this is a market that I think will continue to be very choppy and difficult at times. So, make sure that you are position-sized correctly. Position sizing is a bit difficult with a wide spread in this market, so as a general rule I would suggest that “less is better.”
Remember that not all brokers trade this pair 24 hours a day and also the spread is rather wide at times so make sure that you don't hurt yourself trading this market. I do think that if we can take out the nasty candlestick from a Friday of last week the dollar probably climbs quite a bit and again if we break down below 17.75 then it could end up being a shorting opportunity we will just have to see how things behave from a risk on perspective. If we do continue to get more risk taking out there, that will more likely than not push this pair lower.
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