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Volatile Nervousness Create Dynamic Opportunity


The USD/MXN traded in a volatile manner early this morning and speculators should be prepared for a complex and fast market today.

The USD/MXN is trading near the 18.52600 ratios as of this writing.  Traders are urged to check on the live market price as they are reading this to see where behavioral sentiment has taken the USD/MXN, the Forex market is moving fast and conditions are choppy. The closure of Silicon Valley Bank on Friday in the U.S. has caused a massive amount of nervousness to emerge.  Movements in the USD/MXN are showing plenty of price velocity.

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In early trading this morning the USD/MXN mirrored many other major currencies when it traded lower, but since hitting a short-term depth the currency pair has reversed higher. Traders need to take into account the Mexican Peso has been one of the strongest currencies in the world against the USD for the past couple of years. As late as Thursday the USD/MXN was trading near lows not seen since 2017 with its bearish trend fully intact.

The ability of the USD/MXN to go up in value when a great amount of nervous sentiment is ripping through Forex may seem normal at first glance for the untrained eye. However, what is intriguing about the ability of the USD/MXN to move higher, is that this move is not exactly correlating to the broad Forex market where the USD has been weaker against many major currencies. Yes, current conditions can and likely will change rapidly, but the strong Mexican Peso is suddenly weaker against the USD, when in fact the USD has been weaker against most other currencies in the short term.

Trying to figure out why this is happening and listening to explanations could prove interesting for the remainder of this week. Except, the USD/MXN may also start to reverse lower and traders need to be prepared for this potential outcome. A reason given for the weakness of the USD in the broad Forex market is that financial houses may be betting on the U.S. Federal Reserve not being aggressive regarding its interest rate announcement next week due to the problems in the corporate banking sector. So why is the USD/MXN climbing higher?

  • USD/MXN traders need to be extra vigilant today and tomorrow and expect choppy trading conditions. Behavioral sentiment could turn quickly. Risk management is essential.
  • As short-term highs get tested, speculators may want to bet on reversals lower, but this could prove very dangerous and costly.

The USD/MXN should be monitored closely as it challenges highs not seen in nearly one month. Conditions are going to remain nervous over the next few days, and technical and fundamental speculators all need to practice caution when pursuing the USD/MXN.  The USD/MXN may feel overbought for the moment, but the Forex market may continue to be a complex mess near-term.

Current Resistance: 18.54000

Current Support: 18.38600

High Target: 18.59900

Low Target: 18.23900

USD/MXN

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