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Support Levels Crumble as Price Velocity Escalates

The USD/MXN has proven capable of creating price velocity even as its rather strong bearish trend has been on display for a long time.

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The USD/MXN pair is trading near the 16.73600 ratio as of this writing and a low of nearly 16.71600 was seen early this morning when Forex opened. The USD/MXN broke through the 17.00000 on Wednesday of last week, and then began to create a rather volatile cycle of downward trading until the end of Friday. The downwards motion in the USD/MXN has been a consistent part of its long-term trend, but the speed of the move lower last week may have even caught sellers of the USD/MXN by surprise.

From Wednesday until early Friday of last week the USD/MXN created a rather loud battle between the 17.80000 to 17.94000 ratios with plenty of reversals, but as the weekend approached the forex pair started to decline again. The ability to go into the weekend near short-term lows as the USD/MXN has certainly enjoyed a bearish trend which has been demonstrated rather consistently since this time last year is intriguing. Some speculators may be once again be asking if the USD/MXN has sold off too strongly, but the old adage that the trend is your friend comes to mind.

The cycle downward last week has now put the USD/MXN within the territory of values it has not traded since late 2015. Technical traders who like to look at support ratios to gain a perspective regarding the potential short-term declines of the USD/MXN will now have to gauge their behavioral sentiment regarding what the future holds.

The U.S Federal Reserve is still expected to raise its Federal Funds Rate on the 26th of July. Recent economic data from the U.S has caused plenty of murky conclusions, meaning analysts are likely confused by their own outlooks. Inflation remains stubborn but has started to show some incremental movement lower, and consumer sentiment has actually been improving recently according to data.

The Federal Reserve would like to end the high cycle of inflation and many financial institutions have seemingly braced for another interest rate hike. The lower movement of the USD/MXN currency pair has happened under conditions in which the possible interest rate increase from the Federal Reserve has potentially been priced in already to the Forex pair. Can the USD/MXN go lower?

  • The ability of the USD/MXN to fall below the 17.00000 last week and sustain values at depths not seen since 2015 is significant.
  • If the price of the USD/MXN remain under the 16.85000 ratio in the near-term this may signal additional selling pressure could ignite.
  • Traders should not be overly ambitious: last week’s price velocity lower may cause a battle for equilibrium to be sought in the coming days for the USD/MXN.
  • Quick hitting traders may be the best tactic for speculators in the short-term.

Current Resistance: 16.75100

Current Support: 16.72100

High Target: 16.86000

Low Target: 16.68100

USD/MXN chart

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