USD/MXN Analysis Today - 20/01: Volatile Higher Range

(MENAFN- Daily Forex)

• The USD/MXN is near the 20.83750 ratio as of this writing with fast fluctuations being displayed early this morning.
• The currency pair did fall to a low around the 20.67000 mark on Friday before beginning to crawl upwards again.
• This morning's early trading has seen more buying as financial institutions are clearly showing signs of nervousness, and this ladies and gentlemen is not about to go away in the coming days.

The U.S is closed for the MLK commemoration today, but clearly financial institutions are focused on Donald Trump's retaking control of the White House in the coming hours. Mexico it is no secret, stands directly in front of the rhetoric and mandates which Trump is getting ready to unleash. Financial institutions are nervous about the relationship between President Sheinbaum of Mexico and Donald Trump which appears to be potentially confrontational.

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The USD/MXN is traversing within the higher depths of its long-term values and this is not a coincidence. While some technical traders who do not focus on fundamentals may argue the USD/MXN is simply correlating to broad Forex nervousness and strong USD centric price action, the fact that Donald Trump intends on using his mandate to influence policy via concerns he has about Mexico should be acknowledged.

The USD/MXN trading above the 20.80000 with sustained power is not going to make financial institutions in Mexico feel comfortable. Trump will certainly speak about Mexico over the next couple of days, and his comments could prove to cause more choppiness in the USD/MXN. The question some speculators and larger players are likely wondering is when resistance will prove worthwhile to bet on reversals lower. In the meantime it feels unwise to look for a sustained reversal lower. Traders should remain diligent regarding the higher values and choppiness that is being seen in the USD/MXN/MXN Potential Volatility to Come

Because humans tend to be optimistic, it is natural to believe the U.S and Mexico will find a way to work with each other and lower the noise being heard. The USD/MXN will prove an interesting currency pair as a barometer regarding the trade and political negotiations that Donald Trump will pursue near and mid-term.

• Financial institutions have clearly positioned for the potential of a weaker Mexican Peso to be seen.
• Choppy conditions should be expected certainly over the next two days and likely into the following week.
• Last Friday's challenge of the 20.92000 level may look completely overbought, but volatility may cause a retest of this level in the coming days.
• Traders of the USD/MXN need solid risk management in place.

USD/MXN Short Term Outlook:

Current Resistance: 20.84100

Current Support: 20.81900

High Target: 20.93000

Low Target: 20.78660

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