- The U.S. dollar has gone back and forth during the trading session against the Mexican peso during the trading session on Wednesday as we are hanging around the 50-day EMA.
- The 50-day EMA is an indicator that I think a lot of people will be paying close attention to.
- I think that it also offers a significant situation where the traders have been paying close attention to it. If we could break higher, the market could go to the 19 Mexican peso level.
The 19 Mexican peso is an indication of US economic strength, mainly due to the fact that the Mexican economy sends so many of its exports into the US. So basically, think of this as a bit of a description of what the flow of goods over the border might be. So, in this scenario, when the US is doing well, the Mexican peso actually outperforms. Furthermore, you do have a lot of interest rate differential here that continues to favor Mexico. So hence we've had a nice downtrend.
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Summer Has Been a Grind
That being said, this is a pair that this summer has been very sideways. So, I think we're at an inflection point right now. And a lot of that is going to come from the speech on Friday from Jerome Powell, Jackson Hole. If he sounds more hawkish than people expect, that's actually going to be positive for the U S dollar. And it's going to hurt Mexico. Now, again, this is a little bit of an inverse situation here.
So as long as the economic numbers in the United States, inflation, consumer numbers, etc., retail sales, all do fairly well, that actually favors the peso. Again, you do get paid to be short of this market, but it's been really grinding as of late. So, I think we will stay in this range at least until Friday.
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