The US dollar jumped against the Mexican peso during early trading on Friday as interest rates in America continue to explode to the upside.
Now approaching the 4.60% level on the 10-year yield, the US interest rate markets are going to be very important to pay close attention to.
The USD/MXN market jumping from here to test that area and then pulling back makes a lot of sense that we continue to see volatility. All things being equal though, this market I think is one that you're looking for opportunities to short, and if and when you do get that opportunity, you are looking very much like a market that will continue in the same overall downward pressure situation that we have been in for a while.
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Technical Support Levels and Downward Pressure
I think over the longer term, we will more likely than not see this market continue to be extraordinarily volatile, but I also recognize that it is a market that probably has a massive floor in it near the 17.20 level. The 17.20 level is an area that I think will continue to see a lot of support.
I think that extends down to the 17.00 level and that of course is going to be a tall order to break down below. If we do break down below that level, then you could see the US dollar drop to the 16.50 level.
A move above the 17.50 level would be bullish, but at this point in time, I think that's very unlikely unless there is some type of massive change in the overall currency markets and risk appetite around the world.
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