USD/MXN Monthly Forecast: June 2024 (Chart)

(MENAFN- Daily Forex)

• The US dollar has been very noisy against the Mexican peso during the month of May, as we continue to look for some type of bottom.
• After all, we are relatively close to a longer-term bottom, which is focused around the 16 pesos level.
• Whether or not this whole area hold for a turnaround remains to be seen, but there are several things that you need to think about in this market before you start putting money to work.

Liquidity, Interest Rate Differential, and Trend

One of the biggest issues that you have trading the Mexican peso is that it's not exactly the most liquid currency pair. There are certain times of the day that some brokers don't even offer it due to the fact that it is almost solely traded in North America. It's also worth noting that the interest rate differential most certainly favors Mexico, so even if we do bounce from here, we need an explosive move to the upside to justify paying the interest rate differential at the end of every day.

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The most important thing to pay attention to in this pair of course is going to be the trend. This is even more true with this market than it is in other major markets, due to the fact that these emerging market currencies tend to trend for long periods of time. This is true in this market, it's also true in other markets like the Indian rupee, South African rand, Taiwan dollar, etc.

At this point, any rally that we get will have to deal with the 50-Week moving average EMA near the 17.20 level, which is an indicator that a lot of people pay close attention to. If we can break above there, then the market could go looking to the 18 pesos level. If for some reason we do manage to break down below the 16 pesos region, that could lead to a massive selloff, but I don't see that happening in the month of June. Quite frankly, the market sir far too quiet at the moment to make that happen and I believe we are going to be more range bound than anything else for the upcoming month. All one has to do is look at the entirety of 2024 and recognize that's the game we've been playing, and I don't think that changes anytime soon.

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