Another strong move downward in the USD/MXN has highlighted the strength of the bearish momentum within the currency pair.
The USD/MXN is trading below the 18.00000 ratios as of this writing. The current price is near the 17.97250 mark as the currency pair displays a sustained ability to provide a bearish trend. Speculators who have bet against the long-term trend of the USD/MXN, because they are contrarian may continue to wager with buying orders, but this may continue to prove a very costly and harmful endeavor.
There are two risk events clearly ahead for the USD/MXN. Today Fed Chairman Jerome Powell will testify to the U.S. Senate and he is certain to speak about monetary policy and inflation. However, even in the midst of the strong rhetoric from the Federal Reserve in early February and then inflation numbers which exhibited stubbornly high prices shortly after, the USD/MXN has not been ripped apart by a strong reversal higher which could be sustained.
Technical traders aiming for more downward price action will be able to point to a low of 17.94045 attained this past Friday. This value and today’s prices of the USD/MXN are challenging numbers not seen since April 2018. Beyond that date which is nearly five years, the last time the USD/MXN sustained these lower values was in 2017. A low of nearly 17.44850 was hit in July 2017. In other words, technical traders who want to consider where the USD/MXN could traverse lower will have to use historic price charts of the currency pair. Traders however should not be overly ambitious, realistic targets should be used.
If the USD/MXN is able to sustain near-term prices below the 18.00000 ratios this could prove to be an additional selling signal. Certainly, there are no guarantees for traders, reversals higher will definitely be seen, it is a question about momentum, however, and the USD/MXN has shown an ability to traverse lower in a rather remarkable manner. Day traders must stay conservative though, and use risk management wisely because the natural cyclical reversals higher can and will cause pain if too much leverage is used and stop loss orders are not working as protection.
- Federal Reserve Chairman Jerome Powell’s testimony should be monitored today. Aggressive-sounding rhetoric from Powell could cause some buying of the USD/MXN in the near term.
- U.S. jobs numbers will be published on this Friday and should be treated with care by traders as hiring and inflation data could provide a volatile impetus for the USD/MXN.
Current Resistance: 18.01800
Current Support: 17.95400
High Target: 18.10090
Low Target: 17.88100