USD/MXN Forecast: USD Rallies Against Mexican Peso
Date
5/10/2022 2:35:17 PM
(MENAFN- Daily Forex) The US dollar rallied nicely against the Mexican peso on Monday, continuing a bounce that we have seen since mid-last week. The greenback has been one of the few currencies strengthening consistently out there, and it certainly looks as if we are going to continue to see that against most emerging market currencies. The Mexican peso appears to be no exception, as we have now crossed above the 20.25 pesos level.
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The size of the candlestick is decent, and now that we have broken above the 50-day EMA, we have now threatened the 200-day EMA. We cannot break above there yet, but it looks as if it is only a matter of time before we attempt. If we break above there, then the 20.50 MXN level would be next. That is an area where we have seen resistance previously, so I think it is a big threat to the upside. If we can break above there, then it is possible that the US dollar could go much higher, perhaps reaching the 21 level.
On the downside, if we were to break back below the 20 pesos level, then we might see another attempt at the 19.75 level. That is where we had recently formed a double bottom, but it seems to be very unlikely of a target at this point. If we break down below there, then we could see a move to much lower areas.
Keep in mind that the US dollar is considered to be a safety asset, as the emerging market currencies are shined in that type of situation. The market has been very choppy, but that is rather normal for this pair, as you can see based on historical price action . The Mexican peso is influenced a bit by crude oil , but quite frankly that correlation is starting to break down as people are worried more about risk appetite trading than anything else. The US dollar has been like a wrecking ball against most things, and the Mexican peso is not going to be any different anytime soon. The US dollar will continue to be instrumental as to where we go in other markets, not just the currency markets. That being said, it still looks like the greenback is king.
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