USD/MXN Forecast Today 04/07: Looks For A Range (Video)
(MENAFN- Daily Forex)
The US dollar has fallen pretty significantly during the trading session on Wednesday, as it looks like we continue to consolidate against the Mexican peso overall. Underneath, I see the 18 pesos level as being very important, as it has offered support previously. On the other hand, the upside features the 19 pesos level and I think we may be trying to hang about and form some type of consolidation.
In general, this is a
market that I think continues to be very noisy and erratic because we are essentially trading on risk appetite, the
federal Reserve interest rate expectations, and then of course politics in Mexico, something that only specialized traders really seem to be able to follow.
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Recent Upwards Bais?
We have seen a massive move higher recently, but we also recognize that the interest rate favors the Mexican peso, so you are essentially swimming upstream when it comes to the swap. It's easier to short this pair than it is to buy it, but if we start to see the US economy slip, ironically that might be good for the US dollar in this particular case due to the fact that so much of Mexico's economy is highly dependent on the United States.
If we were to turn around and break above the 19 level, then we could go much higher. On the other hand, if we break down below the 18 level, then the 200-day EMA near the 17.40 level could be your next target. I expect a lot of volatility but at this point in time, it looks like we are trying to form some type of holding pattern. Furthermore, keep in mind that the Independence Day celebrations on Thursday will have the Americans out of the market, so this might be a very quiet Thursday session. We get the jobs numbers on Friday. That might be a completely different scenario altogether.
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