The USD/MXN has returned to the lower elements of its mid-term price range as it hovers over support levels which have proven rather durable for several months.
The USD/MXN is near the 20.26300 level with fast changes in values being seen. The currency pair has correlated well to the broad Forex market, this after the USD/MXN did climb to a high of nearly 21.0000 early on the 4th of March. Tariff jitters proved important early last week, but then just like the previous month President Trump announced a postponement of many proposed sanctions against Mexico and the currency pair sank again.
When President Trump backpedaled from his threat of imminent tariffs being imposed, financial institutions began to calm and the USD/MXN returned to values seen in the middle of February. Traders looking to take advantage of the volatility hopefully were using take profit targets and cashed out profits if they were achieved, this before they vanished into air as the USD/MXN again sold off.
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Volatility and Support Levels in the USD/MXN
Forex trading across the board has been hard for speculators the past handful of months, this as financial institutions react quickly to noise coming from many directions. The ability of the USD/MXN to return to support levels within the 20.25000 vicinity is intriguing, because the levels of 20.20000 to 20.30000 have produced plenty of choppy conditions since late December. And the USD/MXN has also shown a great deal of capacity to snap above the 20.30000 marks and challenge higher levels when nervousness increases because of White House rhetoric.
Speculators of the USD/MXN will need to remain vigilant. Troublesome rhetoric may be calm for the moment, but day traders should not count on this to continue. The broad Forex market did produce USD centric weakness last week and this helped the USD/MXN price velocity increase. The combination of tariff concerns and broad market nervousness propelled also by a lack of clarity because of President Trump’s tendency to make bombastic statements continues to create turmoil.
Speculation in the USD/MXN Near-Term
Perhaps today and tomorrow will remain calm for Forex and the USD/MXN. Perhaps they won’t. Traders need to have a full arsenal of risk management working at all times. While the 20.30000 to 20.35000 levels may appear as overbought in the near-term and a potential place to look for reversals lower, if Trump has thrown gasoline onto the tariff rhetoric, then the USD/MXN could escalate quickly.
- Traders looking for more downside momentum should not get overly ambitious, but looking for support levels to be challenged may prove worthwhile near-term.
- But traders should be prepared to use quick take profit orders if they are seen.
- The U.S will issue inflation data this Wednesday and Thursday, but it is Trump rhetoric which will create reactions in the USD/MXN near-term.
USD/MXN Short Term Outlook:
Current Resistance: 20.27100
Current Support: 20.25000
High Target: 20.33100
Low Target: 20.21500
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