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The USD/MXN certainly proved dynamic last week and its price action before the U.S. Feds monetary policy statement this Wednesday may provide more surprises.
Traders who were worried early last week about the direction of the USD/MXN and were questioning if the long-term bearish trend of the currency pair was coming to an end received their answer. The USD/MXN delivered a strong resounding amount of selling which has essentially brought the Forex pair back to within sight of the 17.00000 level and may have bearish speculators dreaming about values seen in the not-so-distant past near the 16.80000 vicinity less than one month ago.
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Trading in the USD/MXN made sense for one reason last week, the currency pair has shown a strong tendency to trade in an uncorrelated way to the rest of the Forex market for a couple of years. The fact that U.S. inflation numbers were stronger last week did not create a wave of sustained buying of the USD/MXN. As of this writing the USD/MXN is near the 17.05350 ratio, the high in the currency pair last week was on Tuesday and around the 17.38350 mark.
While the USD/MXN had delivered a rather dramatic bullish run higher in the previous two weeks, last week’s trading produced rather intriguing evidence the currency pair has plenty of ability to fight against perceived headwinds. Not only was U.S. inflation data stronger, but the European Central Bank surprised financial institutions with an interest rate hike. While many other major currencies paired against the USD suddenly got weaker last Thursday, the USD/MXN seemed to hardly notice the shifts in global behavioral sentiment and was trading near the 17.09200 ratio after the dust settled regarding the surprise interest rate hike.
Speculators need to understand the U.S. Federal Reserve will conduct its FOMC meeting and make its announcements this Wednesday. The fact that the ECB raised rates last Thursday and made most currencies weaker against the USD as financial institutions grew nervous, but the Mexican Peso remained steady and got stronger is noteworthy.
- The near-term of the USD/MXN could provide plenty of surprises considering its results last week and its ability to swim against the tide. The 17.05000 may prove to be an interesting short-term barometer regarding sentiment.
- Traders should not be overly ambitious in the short term and be willing to cash out profitable positions before they vanish because of natural reversals in the Forex markets.
- The USD/MXN certainly proved dynamic last week and its price action before the U.S. Feds monetary policy statement this Wednesday may provide more surprises.
Current Resistance: 17.07100
Current Support: 17.04760
High Target: 17.09775
Low Target: 17.02200
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