The USD/MXN has continued its bearish trend, and as of this morning is traversing near the 17.79225 mark, this after touching lows on Friday not seen since the first week of June.
- Speculators who have been pursuing selling positions of the USD/MXN based on the perception the currency pair was overbought during the height of the political concerns coming from the Mexican elections have likely been rewarded.
- As of this morning the USD/MXN exchange rate is near the 17.79225 level. On Friday the currency pair touched the 17.59000 vicinity.
- The opening in the USD/MXN did jump higher but trading since the early gap was created this morning has calmed and the higher realm of 17.84500 did not last long.
Since touching the 19.00000 realm on the 12th of June a lot of the fear in financial institutions has subsided, not everything is perfect but the trading environment is much more comfortable. The downturn in the USD/MXN got another boost of energy late last week when the U.S inflation data via the Consumer Price Index came in weaker than anticipated.
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Correlations with U.S Economic Data for the USD/MXN
On the 2nd of July the USD/MXN was trading near the 18.50000 level and downwards momentum has been strong. Last Tuesday the USD/MXN was able to break below the 18.00000 realm and value has been sustained beneath this important psychological ratio. Intriguingly the USD/MXN was near the 17.88000 vicinity when the U.S CPI data was released on Thursday, upon the results being seen the currency pair challenged the 17.70400 ratio.
What makes the technical perspective of the USD/MXN interesting is the knowledge the downwards momentum in the currency pair while strong based on the U.S inflation results was actually not violent. This could be interpreted as a sign that selling sentiment already existed in the USD/MXN before the Consumer Price Index showed weaker inflation and the outcome merely added ammunition for financial institutions to conclude additional selling of the currency pair was the right decision.
Friday’s Lows and Near-Term Considerations for the USD/MXN
The low of nearly 17.59000 on Friday may be a sign of things to come in the USD/MXN. However, for the moment the USD/MXN will have to sustain its price levels and resistance will need to be durable. If the USD/MXN continues to trade below the 17.80000 ratio in the near-term this may indicate more selling momentum is being considered by financial institutions.
- The U.S will release Manufacturing data today via the Empire State report.
- Tomorrow’s Retail Sales figures from the U.S could prove more important, particularly if U.S consumer show that their outlooks are growing less optimistic.
- If U.S data today and tomorrow is weaker than anticipated this could create more selling of the USD/MXN and a retest of lows seen late last week.
USD/MXN Short Term Outlook:
Current Resistance: 18.82300
Current Support: 18.78100
High Target: 18.85700
Low Target: 18.70300
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