The USD/MXN has been hovering near the 19.68000 to 19.67000 ratios the past couple of trading sessions as holiday markets have prevailed with lighter volumes and risk premium is being discounted.
The USD/MXN has turned in an intriguing performance the past ten days. After touching highs of nearly 21.10500 on the 9th of April, the USD/MXN is now traversing support the past couple of trading sessions as it looms near 19.68000. Mexican and U.S banks will be open today, but it is questionable what type of trading volumes will be seen as employees of financial institutions make their way slowly back to their offices.
There can be no doubt the USD/MXN has seen a surge in selling as risk premium costs have started to be discounted. Tariff shadows certainly still shadow the global markets, but the fact that Mexico is out of the spotlight for the time being and has been replaced by China as the target for U.S White House rhetoric is significant. The ability to stay out of the spotlight and let tranquility enter has put the USD/MXN back to values not seen since October 2024.
Trading Volumes and Support Levels Speculatively
Global conditions in the broad markets will remain nervous early this week. There is no guarantee that Mexico will stay out of the White House’s line of fire, but if noise manages to remain calm the USD/MXN may be able to correlate more to the global Forex markets where USD centric weakness remains a theme. However, because volumes will be light today, traders may want to view prices rather skeptically until tomorrow.
As support levels seem to have formed near the 19.68000 realm the past couple of days, technical traders also need to be reminded this ratio may be an illusion and will not likely hold over the next two days. Limited trading the past couple of days leading into Thursday of last week has created technical graphics which may not prove durable. Behavioral sentiment remains speculative. Selling has been strong, but traders may want to wait until tomorrow before jumping back into the USD/MXN.
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Confidence Building and Optimistic Viewpoints
For the time being it appears President Claudia Sheinbaum has handled the rhetoric and negotiation tactics of President Trump well enough to create confidence in financial institutions. The USD/MXN has certainly sold off well the past week and a half, but traders should remember surprises still potentially lurk.
- Selling blindly into the rays of optimistic banter may be a ‘feel good’ position, but traders should remain realistic and not get overly ambitious regarding targets.
- If the 19.68000 level sees sustained trading below and the 19.66000 to 19.65000 ratios start to get tested this would be a solid signal, but until large volumes return into Forex and the USD/MXN, traders should remain cautious.
USD/MXN Short Term Outlook:
Current Resistance: 19.69700
Current Support: 19.67100
High Target: 19.74400
Low Target: 19.64900
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