The USD/MXN is near the 17.50000 level depending on the bid and ask at this moment, this as the currency pair remains relatively calm while showing an ability to creep lower.
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After touching a high of nearly 17.67670 last Wednesday, the USD/MXN has shown an ability to move lower. The current price of the USD/MXN is around 17.50000 as the week’s price action begins. Investors globally remain nervous and they will certainly be keeping their eyes on conditions from Wall Street later today when U.S equities open.
The USD/MXN has correlated well with the broad Forex market and although the Mexican Peso certainly lost some value a couple of weeks ago and sustained highs, the currency pair has not traversed wildly away from its rather stronger bearish realms. The USD/MXN at its current values, if sentiment remains calm, may be a place speculators believe has the potential to produce additional downside.
Big Questions in Forex and for the USD/MXN
However, before speculators blindly leap into USD/MXN selling positions, they will likely want to see continued stable conditions via WTI Crude Oil prices and a calm start of trading on the U.S equity markets homefront. Sentiment remains a big driver in the current Forex world and financial institutions are nervous regarding their outlooks
Yet, there are notions starting to be heard among analysts that what was perceived to be a rather hawkish stance from the Federal Reserve a couple of weeks ago, actually was not. Meaning that fear of a U.S interest rate hike is starting to subside. If financial institutions do not believe the Fed will raise the Federal Funds Rate, the Middle East remains somewhat calm, and Wall Street behaves, then the USD/MXN could find some reasons for risk appetite to increase and to sell the currency pair.
Limiting Risk as the USD/MXN Appears Overbought
But there is a lot of area for problems to arise. If day traders want to pursue a lower USD/MXN they can certainly find easy reasons, one – because it does appear to be in technical territory that is simply too high.
However, rational approach to the USD/MXN should include looking at where sentiment is and knowing conditions are likely to remain choppy.
The USD/MXN below 17.50000 may be the key, and if sustained below, this terrain could spark further targets lower.
Price velocity will increase as full trading comes into the North American market later today.
Traders should also remember a big U.S holiday is coming on the 4th of July, meaning volumes could become thinner late on Thursday and into Friday before the long weekend holiday even starts.
Day traders should remain cautious, looking for the USD/MXN to traverse lower realms feels correct, but it might need another dose of positive impetus to ignite stronger selling short and near-term.
USD/MXN Short Term Outlook:
Current Resistance: 17.50220
Current Support: 17.49800
High Target: 17.52100
Low Target: 17.44200
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