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USD/MXN Forecast: US Dollar Rips Higher Against Peso After Election

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • During my daily analysis of exotic currency pairs, the USD/MXN pair has caught my attention, as we pierced the 20.50 MXN level at one point during the session.
  • That being said, we have turned around to show signs of exhaustion, but quite frankly this is a pair that is trying to break to the upside as hard as it possibly can.

USD/MXN Forecast Today - 7/11: USD Up vs Peso (Chart)

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US Elections

Keep in mind that the US elections have just as much of an influence on what happens in Mexico than it does the United States. After all, one of the biggest movers of the USD/MXN currency pair that people don’t pay attention to, at their own peril from my standpoint, is the fact that a lot of migrants cross the border to work in the United States and send the US dollars back into Mexico. It is a sizable and quantifiable action that happens on a daily basis, and now that Donald Trump is taking power in January, enforcement of the border will start to become a big thing.

That being said, it’ll be interesting to see how the exports from Mexico into the United States are affected. It is worth noting that Mexico is the largest exporter to the United States, but at the same time you can make an argument that Donald Trump threatening to put a tariff of 200% on Chinese cars being manufactured in Mexico tells you that the Americans are going to be perhaps playing hardball when it comes to international trade. This overrides the interest rate differential in this pair, and although a strong American economy is very good for the Mexican economy it’s not necessarily a straight 1 to 1 correlation.

If the market were to turn around a breakdown below the 20 MXN level, then I think we have the 50 Day EMA near the 19.65 MXN level, with the 19 MXN level underneath there offering significant support also. In fact, it’s not until we break down below the 19 MXN level that I would consider this a market that can be shorted anytime soon.

 

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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