(MENAFN- Daily Forex)

• The US dollar rose against the Mexican peso during trading on Tuesday, but what could be thought of as somewhat quiet and sideways trading. This does make a certain amount of sense, as there are a lot of questions about the US economy, and of course we have the US government shut down. Remember, Mexico is highly levered to the United States, as it is the world's largest exporter to the world's largest economy.
• While most people think about China in that prism, the reality is that Mexico is a much bigger exporter, at least as far as the Americans are concerned.

We are obviously in a downtrend, and I think that makes sense considering that the Mexican peso offers a positive swap, and of course we are continuing to see strong US economic behavior. Remember, Mexico exports to the United States, so therefore if the US economy is doing well, that means that Mexico is also Analysis

As stated before, we are obviously in a downtrend, and we also have a couple of levels that I am watching. We have the downtrend line, which is near the 18.55 level, but we also have the 50 Day EMA hanging around that same line. We also have the 18.50 level, an area that previously had been support, and has been acting as resistance recently. Because of this, I think you've got a situation where short-term rallies continue to look to be selling opportunities.

EURUSD Chart by TradingView

That being said, if we were to break above the 18.80 level, then I start to look in the other direction. I'm not there yet, and I don't think it is likely to happen easily but do keep an eye on this market because if the US dollar suddenly starts to overtake the Mexican peso and is rallying against other currencies, that could be a situation where we have a big“risk off scenario”, which is the one thing that can really work against the Mexican peso here.

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