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MENAFN- Daily Forex)
- During the month of January, the US dollar has been somewhat sideways against the Mexican peso as we continue to bang around between 2 major levels on the chart.
- The 20 MXN level underneath is significant support, with the 21 MXN level above being significant resistance.
- As things stand right now, this is a market that I think will continue to attract a lot of attention, mainly due to the geopolitical ramifications of the Donald trump administration coming to power.
The tariff situation will continue to take front and center as far as attention is concerned, as traders are wondering whether or not Donald Trump will actually levy a 25% tariff on the Mexicans. At this point in time, it seems like a bit of a fluid situation, but by the time it's all said and done, it's very likely that it will be more bluster than anything else. After all, the Mexicans cannot afford a 25% tariff, and although we have recently seen shootings between Mexican cartel members and border patrol agents on the Texas/Juarez border, that's not necessarily the first time that's happened.
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All things being equal, I suspect that February may be more of the same, as we are trying to determine where things go next. The Mexican peso obviously has a lot of things working against it right now, because we are also looking at a global market that may start to see less trade and therefore see less in the way of risk appetite. With this being the case, think you have got a situation where we continue to see a lot of choppy behavior, so therefore if you are a short-term trader, the USD/MXN pair might end up being a market that you like. That being said, if we were to break down below the 20 MXN level, we could see a pullback to the 19.25 MXN level, and a move above the 21 MXN level could open up a move to the 21.75 MXN level.
EURUSD Chart by TradingView
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