The USD/MXN broke through the 20.00000 level before going into the weekend, and in early trading this morning is near the 19.92725 ratio as financial institutions show a bit of optimism.
The USD/MXN fell to lows which challenged the 19.84450 vicinity on Friday before going into the weekend, the values produced were the lowest seen since the 6th of November, which was one day after the U.S election. The USD/MXN has remained under the important 20.00000 level early this morning as financial institutions continue to display a greater amount of risk appetite.
The broad Forex market has been certainly showing signs of USD centric weakness the past few weeks and the USD/MXN has correlated to this sentiment. However, the move lower in the USD/MXN may have something to do with the belief that the U.S White House and their political counterparts in Mexico are trying to work on a trade deal, which both sides can claim some type of victory. But the final results are not yet in and it would be foolhardy to get too far ahead of current outlooks which need to remain somewhat cautious.
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Return of Values Below 20.00000 in the USD/MXN
The USD/MXN has now returned to values seen in the first week of November, but the currency pair is also traversing ratios seen in October and August of 2024. The highs in the USD/MXN have not only been a result of nervousness generated by President Trump, they are an effect of behavioral sentiment turning fragile in Mexico following the election for the President of Mexico, Claudia Sheinbaum, which occurred in early June of 2024.
It was late October and early November of 2024 when the USD/MXN started to show signs of sustaining value above the 20.00000 level. The ability to trade below this ratio is a solid accomplishment now, but what happens next will be factored by a correlation to the broad Forex market and sentiment which may remain suspicious about economic concerns in Mexico. Also, rhetoric from President Trump is certainly not going to vanish. Meaning current price levels should be treated carefully by speculators.
USD/MXN Near-Term Thoughts and Considerations
The ability to trade lower in the USD/MXN is a solid outcome for bearish speculators who have believed the Mexican Peso was too weak. The bearish trend now will be confronted by support levels which may prove rather durable between 19.85000 and 19.80000.
The U.S will issue Retail Sales data today, but the bigger news will be the Federal Reserve’s FOMC Statement this coming Wednesday which is expected to be cautious.
The USD/MXN may remain in a correlated trend with the broad Forex market, but speculators should remain nervous about the potential of President Trump to cause a storm in the currency pair.
USD/MXN Short Term Outlook:
Current Resistance: 19.92800
Current Support: 19.91400
High Target: 20.00100
Low Target: 19.86900
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