- During the trading session on Wednesday, we have seen the US dollar dipped slightly against the Mexican peso, only to turn around and show signs of life.
- Ultimately, this is a market that ended up forming a bit of a hammer, and it is worth noting that that hammer is sitting just below the 200 Day EMA indicator.
- The 200 Day indicator would be very important, and therefore I think a lot of people will be watching this area.
- If we were to break above the 200 Day EMA, then it’s likely the market could go looking to the 20 MXN level.
On the downside
On the downside, if we were to break down below the bottom of the candlestick for the trading session on Wednesday, then it opens up the possibility of the US dollar dropping all the way down to the 19 MXN level.
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The 19 MXN level is an area that has been important more than once, and therefore it’s likely that we would continue to see that area as important. This is the same thing that I see in multiple pairs, that the US dollar is trying to fight back, but all things being equal, it is an oversold condition for reason. With that being said, I think you have to understand that any rally at this point in time probably shows up as a potential selling opportunity, unless of course we break back above the 20 MXN level.
Even mind that the tariff war continues to see a lot of back and forth in this currency pair, as well as many others. The Mexican economy is very sensitive to what goes on in the United States, so if we see the US enter recession, it actually works against the Mexican peso more than it does the greenback. However, the recent selloff in the US dollar against other currency pairs has had an influence on this market. It does look like we are trying to recover in the short term though.
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