Sustained Bearish Momentum Once Again Ignites

Considering the USD/MXN has maintained its downward trend the past week even as Crude Oil prices have slumped slightly, demonstrates the underlying bearish momentum of the currency pair. 

The USD/MXN was able to produce a rather intriguing incremental trajectory lower all of last week. While many other major currency pairs teamed against the USD struggled, the USD/MXN bearish momentum continued to produce trading results that matched its long-term trend lower. The high for the USD/MXN last week was on Monday the 21^st of August near the 17.08935 ratios, this followed a high the Friday before on the 18^th around the 17.15025 mark.

While global markets have produced a sincere amount of nervous behavioral sentiment the USD/MXN has not mirrored these results all the time. The USD/MXN continues to go against the flow in Forex and underscore Mexico’s early aggressive rate hikes before most other major central banks acted.

The benchmark borrowing rate in Mexico remains 11.25% and this has been on hold since the last increase in March of this year. The early rate hikes by Banxico, the Bank of Mexico, were more aggressive than the U.S. Federal Reserve, thus creating a dynamic in which financial institutions maintained their holding of the Mexican Peso.

Considering the USD/MXN has maintained its downward trend the past week even as Crude Oil prices have slumped slightly, demonstrates the underlying bearish momentum of the currency pair. The ability to break below the 17.00000 level on early Tuesday of last week, and sustain momentum downward may have surprised some traders who believed global nervous conditions would create a buying surge in the USD/MXN, but strong higher moves never materialized.

The USD/MXN is not a one-way road lower; speculators need to understand reversals higher are produced every day and the currency pair cannot be wagered on blindly to simply pursue lower price values. The 16.75000 level as resistance should now be watched to see if it can prove durable over the short and near term. Global market nervousness remains heightened due to concerns about U.S. corporate banking downgrades, and recessionary pressured in Europe and China. However, if the USD/MXN continues to test lower values and make resistance levels above appear durable; traders may be tempted to believe the 16.68000 level below could be targeted again.

• The price momentum generated lower last week is not guaranteed to keep the same pace.
• Price targets should be kept realistic and traders should not bet on huge lower moves to emerge.
• Because broad market nervousness exists, traders should certainly keep an ear on economic data from the U.S and other spheres this week, even if they insist on staying technically oriented regarding the USD/MXN.

Current Resistance: 16.74300

Current Support: 16.71100

High Target: 16.78900

Low Target: 16.69300

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