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MENAFN- Daily Forex)
- During the trading session on Wednesday, we had seen the US dollar spike a bit against the Mexican peso as interest rates climbed again in the early hours.
- We broke above the 20.50 level only to turn around and show signs of exhaustion.
- By doing so, the market is looking for a little bit discombobulated at the moment, but that makes a certain amount of sense considering that we are still in the midst of the transition in the US administration, and at the very top of interest rates, as far as the range is concerned in America.
So, the question is, do we go back and forth? Or do we see a bigger shot higher or lower? I think at this point in time, the market is a little bit cautious, which makes a certain amount of sense, with the 20 paces level underneath being support, and the 21 level above being a bit of resistance.
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Sideways Between Now and Trump
All things being equal, I do think we go sideways between now and the Trump administration. But once the Trump administration takes over, all bets are off. I think the market is just simply tentatively counting down the days to the Donald Trump election in America as tariffs are most certainly on the table. And quite frankly, I think would be pretty popular in the US. On the same hand, you also have to realize that if the Mexicans do work with the Americans, especially on the border issue, that could provide the relief that the peso needs. As things stand right now though, the bond market screams stronger US dollar, and therefore I think we continue to press this area above. The 21 level has been an important resistance multiple times in the past, so it's not a huge surprise to see that we have struggled to break above there. But if and when we do, that could become a big buy and hold signal.
EURUSD Chart by TradingView
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