New Lows Seen as Momentum Shows Downward Strength

The USD/MXN hit another new low before going into weekend, as the currency pair continues to challenge values it has not seen in many years.

The bearish momentum of the USD/MXN served as another reminder to all traders late last week.  The USD/MXN hit a value of nearly 16.62500 on Friday; the last time this price had been seen was in December 2015. The ability of the USD/MXN to continue delivering a bearish trajectory lower has hopefully served speculators well. Yes, reversals upwards are definitely seen too, but resistance levels continue to prove durable.

As of this writing the USD/MXN is near 16.73000, the high for the currency pair last week was made on Wednesday around the 16.98550 ratio.  This high was made before the U.S. Federal Reserve raised its interest rate by another 0.25%, showing the higher range of the USD/MXN was merely bracing for the potential of a surprise. But upon being given the anticipated hike via the Federal Funds Rate, the USD/MXN incrementally started to trade lower.

Friday’s low in the USD/MXN actually came after a solid growth report from the U.S. via the GDP numbers.  The ability of the USD/MXN to create and sustain lower price realms has been significant and the higher price of Crude Oil which is being demonstrated now, adds to this flourish of strength for the Mexican Peso.

Traders certainly cannot bet blindly on the USD/MXN to continuously move lower, at some point financial institutions will believe equilibrium has been found.  The lows of the USD/MXN that were seen on Friday broke the 16.70000 mark with relative ease. The target USD/MXN traders will now likely aim for is the 16.70000 level in the near term to see if this will be challenged again. Momentary volatility via reversals must be given attention and risk management needs to be practiced. Short-term resistance levels near the 17.75000 to 17.77000 ratios should be watched. If these numbers prove durable it may be an indication some selling momentum may be demonstrated again.

• The Non-Farm Employment Change numbers will be published on Friday and be important, but the Average Hourly Earnings statistics should be monitored too. If the wage data comes in below expectations this could spark additional selling in the USD/MXN.
• While the USD/MXN has certainly been in a bearish trend, traders cannot be overly ambitious regarding downward movement. The moves lower are mostly coming in small incremental amounts, the price velocity seen late last week cannot be depended on.
• This means traders looking for downside price action may want to use quick hitting take profit orders as they target support ratios they believe will be challenged.

Current Resistance: 16.76100

Current Support: 16.71700

High Target: 16.80300

Low Target: 16.66800

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