USD/MXN Forecast Today 04/02: Trade War Eases (Chart)

(MENAFN- Daily Forex)

• In what will probably be thought of as the“shortest trade war ever”, the Mexicans have been the need to Donald trump after the Americans announced a 25% tariff on Mexican goods over the weekend.
• In fact, it was already set up that the Americans would then put a 50% tariff on Mexicans for the retaliation, so we were always going to see a bit of a boiling point.

The market initially gapped above the 21 MXN level, an area that is massive in its importance. That being said though, the Mexicans have announced that they are going to send 10,000 troops to the Mexican border to help stem the flow of fentanyl into the United States and therefore are starting to show signs of cracks in their defiance. Furthermore, the Mexican retaliatory tariffs are on hold for a month, which also seems to be de-escalating the entire situation in general.

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The technical analysis for this USD/MXN pair is still very bullish, as the market continues to see a lot of upward pressure underneath, with the 20 MXN level offering massive support, but between now and then, we also have the 50 Day EMA offering support. The market is likely to continue to see a lot of people willing to jump in and pick this market up, but I would not do so right now. This is a market that is celebrating the fact that the trade war may be cooling off, but we also have to keep in mind that this pair had been in an uptrend for multiple reasons to begin with.

EURUSD Chart by TradingView

The Mexican economy has been a bit of a mess for a while, and the US economy remains very strong. Even Donald Trump admitted that keeping interest rates higher in the United States probably made the most sense right now, and therefore it makes sense that the US dollar continues to be rather strong. The only question I have at the moment is whether or not the 20 MXN level will hold as a floor in the market? If it does, then we just had right back into the previous consolidation area.

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