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Lower Range Tested as Cautious Results Demonstrated


The USD/MXN has produced a tight consolidated trading range the past week and speculators should proceed with care in the coming days.

The price range of the USD/MXN has proven durable and has been rather tight and impressive. Speculators need to remain on alert because price action that produces rather durable support and resistance like the USD/MXN had done recently is certain to exhibit a breakout at some point. It is a question of when. Yes, the tight values could linger for another week or so, but there are important data reports from the U.S. coming this week and the U.S. Federal Reserve is on the schedule for the 3rd of May.

The ability of the USD/MXN to move lower should not be discounted by traders. Last week’s price action and durable support levels, shows trading results often do not happen for speculators in their hoped-for timeframes. Yes, the 18.00000 mark remains very close and is certainly a target psychologically for traders who have downside ambition. However, support levels proved significant last week and traders may have to anticipate more choppy conditions to prevail in the short and near term.

Perhaps one way of trading the USD/MXN is to wait for moves higher to perceived resistance levels and then to look for movement lower via selling. But this notion could prove dangerous in the coming days, U.S. data via the CB Consumer Confidence will be published tomorrow, Advance GDP numbers come this Thursday and on Friday inflation statistics are presented.

  • While financial houses have digested the coming interest rate hike from the U.S Federal Reserve on the 3rd of May, questions linger about what will happen in June.
  • A lack of clarity regarding the U.S. central bank is perhaps creating consolidated trading within the USD/MXN.

The bearish trend of the USD/MXN has been rather consistent over the long term and speculators may be inclined to believe it will continue. Timing the USD/MXN could prove costly if mistakes are made regarding momentary reversals. Traders should not be overly ambitious in the coming days because of the U.S. data, which if stronger than expected could cause some buying of the USD/MXN as a reaction.

Resistance levels may look attractive to ignite short positions within the USD/MXN, but traders should accept the notion that a major downturn is likely not going to happen in the near term. A choppy consolidated range should be anticipated in the next couple of days as financial houses remain conservative until they have more clarity regarding U.S. economic data and Fed outlook.

Current Resistance: 18.04700

Current Support: 18.00110

High Target: 18.10650

Low Target: 17.96500


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