- The US dollar has drifted a bit lower during the trading session on Wednesday against the Mexican peso as it has basically struggled against quite a few different things.
- So, with that being said, I think you've got a situation where traders are looking at the 20 pesos level as a major support level, and we're waiting to see whether or not that holds.
- If the 20 pesos level does get broken through to the downside, then the next potential support level is going to be the 200 day EMA, which is currently at roughly 19.65 or so.
- Also, it is worth noting that the market breaking below there could change a lot of things going forward, although I believe this to be unlikely in the present environment.
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A move above the 50-day EMA could send the US dollar back towards the 21 pesos level, and quite frankly that wouldn't surprise me because we are still dealing with a lot of questions when it comes to tariffs. And that of course will have a major influence here, but what also has a major influence is the fact that the Mexican economy is slowing.
The US economy slowing has an outsized effect on the Mexican economy because Mexico sends most, well over 80 % of its exports into the United States. So, with that being said, the two are interlocked, and of course we've seen millions of migrants head back to Mexico, so there are less remittances being sent across the border. All of this ties together for a range-bound market, but one that I think could be very volatile soon. My suspicion is the next major driver of this pair is going to be an announcement, be it good or bad about tariffs between the United States and Mexico.
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