After trading above the 20.00000 level on Tuesday and Wednesday of last week the USD/MXN began to slide lower and went into the weekend touching values last seen on the 26th of August.
- In early trading this morning the USD/MXN currency pair has been able to sustain the lower elements of its near-term depths.
- The USD/MXN continued to challenge and surpass the 20.00000 level on Tuesday and Wednesday of last week, but financial institutions began to show signs of selling and Thursday and Friday’s lower move did show price velocity.
- The USD/MXN is trading near the 19.23600 mark as of this writing with its typical fast fluctuations being demonstrated.
The USD/MXN has a big week of trading ahead. The U.S Federal Reserve is going to announce their interest rate decision this coming Wednesday. The USD/MXN has not exactly been trading in a strong correlated manner with the USD the past few months, so the reactions in the currency pair to the interest rate cut coming from the U.S Fed and its rhetoric will be rather significant regarding behavioral sentiment insights looking forward.
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Short-Term Tension as Lower Depths in the USD/MXN Tested
The ability of the USD/MXN to drop to lows which haven’t been tested since the last week of August will now stir speculators. The lows within the currency pair still remain within the higher price realm. The notion that the USD/MXN would have been trading above the 19.00000 with sustained value this past spring in conversations, would have caught many traders off guard when talking about potential values. Speculators may feel the USD/MXN is still overbought and they may be proven correct over the mid-term, but short-term scenarios still include nervous outlooks regarding the U.S Fed and Mexican politics.
The volatility in the USD/MXN displayed the past few months and the short-term make wagers look attractive for day traders, but this also makes the currency pair dangerous. Technical charts will have to look at short, near and mid-term support levels and try to combine perceptions with nervous financial institutions who appear jittery.
The Fed and Coming Considerations for the USD/MXN
The Fed will cut its interest rate on Wednesday, but the question is if they will cut by 0.25% or 0.50%. Many analysts are starting to believe the Fed will remain cautious. If this proves to be the case, then Fed rhetoric regarding November will prove important and could impact the USD/MXN.
- Choppy trading should be expected over the next couple of days, particularly because of the lower movement made in the USD/MXN over the last three days.
- Traders are urged to be cautious, reversals higher in the currency pair have developed quickly so risk management is essential.
- Traders looking for lower values in the USD/MXN should not get overly aggressive.
- The ability of the USD/MXN to create swift movement makes it attractive, but also a dangerous wagering ground over the short-term.
USD/MXN Short Term Outlook:
Current Resistance: 19.24650
Current Support: 19.23200
High Target: 19.31400
Low Target: 19.18000
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