The USD/MXN continued to move upwards last week showing financial institutions remain nervous about the outlook for the Mexican Peso.
- Traders who were convinced the incremental higher price action in the USD/MXN exchange rate was temporary when it happened a week and a half ago were rudely treated to more buying action in the currency pair last week.
- Hopefully traders have learned the past couple of months that behavioral sentiment within financial institutions has obviously taken on a nervous mindset regarding the Mexican Peso, and although USD centric weakness may be coming into vogue the USD/MXN has remained bullish.
As of this writing the USD/MXN is near the 18.49125 level and traversing within quick fluctuations. The USD centric weakness which was seen on Thursday and Friday of last week in many other major currency pairs did not happen for the USD/MXN. On Tuesday of last week, the currency pair was near the 17.95000 realm when it suddenly burst higher and then held onto higher realms the remainder of the week.
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Short and Near-Term USD/MXN Trading Considerations
Traders who continue to flirt with bearish sentiment should remain careful with the USD/MXN. Yes, the currency pair does look overbought and it is certainly around mid-term resistance levels near the 18.50000 to 18.55000 ratios, but the USD/MXN has also traded higher in the not so distant past of June. Political nervousness seen in that month still likely lingers a bit in financial institutions.
While the USD did sell off against many major currency pairs late on Thursday and going into the weekend, this was not the case with the USD/MXN as the 18.50000 target was tested. U.S economic data showed that inflation does seem to be eroding, but the USD/MXN went into the weekend near highs and this sets the table for speculative trading today and tomorrow before the U.S Fed on Wednesday.
USD/MXN Sustaining Higher Marks and Speculative Considerations
Again, while the USD/MXN does look high, but selling the currency pair should be done with quick hitting goals in mind. Being overly ambitious could prove to be expensive. Mid-term outlook for the USD/MXN may feel as if selling should start to dominate, but underlying economic conditions as seen by financial institutions dominating in Mexico may not agree for the time being.
- If the USD/MXN continues to stay near the higher part of its price range today and tomorrow without seeing a bold move lower towards the 18.42000 value, this would show large traders still want to see impetus to make them become sellers.
- The U.S Fed is expected to sound dovish this Wednesday, this would seem to be a logical trigger for selling. But will it?
- And U.S jobs numbers come on Friday. USD/MXN traders should be conservative and wagers should be done with risk management.
USD/MXN Short Term Outlook:
Current Resistance: 18.49800
Current Support: 18.47500
High Target: 18.51850
Low Target: 18.43400
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