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The USD/MXN has returned to long-term lows, as its bearish trajectory has wiped out a move higher made after the U.S jobs numbers on the 3rd of February.
The USD/MXN is trading near the 18.56900 ratio early this morning, after displaying a low a few hours ago near the 18.55000 mark. Trading in the USD/MXN is remarkable and speculators are faced with a difficult betting decision in the hours ahead.
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On Monday the 6th of February the USD/MXN reached around 19.32250 momentarily before starting to reverse lower. The stronger-than-expected U.S jobs numbers on the 3rd of February certainly caused the strong move higher and caused the USD/MXN to see its long-term bearish trend take a beating.
However, in the days since this powerful short-term climb, the USD/MXN has progressively traded lower again and is testing long-term lows once again. On the 1st of February, the USD/MXN traded near the 18.51250 ratios, but traders need to keep in mind the USD/MXN had last touched this depth in early August of 2018.
U.S CPI Data in a Handful of Hours will cause Volatility for the USD/MXN
The return to these long-term lows by the USD/MXN leaves traders wondering what will happen next, particularly as the U.S. Consumer Price Index numbers await release later today. While the USD/MXN is already challenging long-term lows, traders may be nervous to pursue an even more bearish track in the near term. However, if the inflation numbers from the U.S. meet or come in weaker than anticipated the USD/MXN could find additional room to move lower.
- Day traders need to use strong risk management today and understand the USD/MXN will become dangerous to wager on before and after the publication of the U.S CPI data.
- Traders looking for more downside should not be overly ambitious and consider using take-profit orders to cash out winning positions to guard against a volatile Forex market.
- If the USD/MXN breaks the 18.51000 level and sustains prices below, this could mean additional selling will ignite in the USD/MXN. However, traders should guard against lightning-quick reversals in the currency pair today.
U.S. inflation Numbers will create new Outlooks regarding Federal Reserve Policy
The U.S. Federal Reserve sounded an almost aggressive stance during its last Monetary Policy Statement, essentially assuring financial institutions it will raise interest rates in March and perhaps in the coming months too. The strong U.S. job numbers confirmed the rhetoric from the U.S. Fed, but doubters remain abundant in the financial world regarding U.S. central bank policy.
A weaker-than-expected inflation report from the U.S. today would likely cause the Federal Reserve to reconsider its rhetoric and policy moving forward over the mid-term. However, if inflation numbers come in stronger than anticipated, the USD/MXN could spark higher and try to challenge the highs seen ten days ago. Traders considering a wager on the USD/MXN today need to be careful, Forex will become fast and dangerous.
USD/MXN Short-Term Outlook:
Current Resistance: 18.60600
Current Support: 18.54990
High Target: 18.80100
Low Target: 18.47700
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