The USD/MXN like the broad Forex market this morning, and last Friday, has seen another burst of nervousness cascade. A jump higher caused by a speech by U.S Fed Chair Kevin Warsh delivered fresh (and perhaps unwanted) perspectives regarding inflation on Friday that has left financial institutions trying to decide what their near-term perspectives are compared to their mid-term outlooks. And these two wanted viewpoints appear to conflict for the time being, meaning day traders of the USD/MXN today have a lot on their minds to consider before pursuing the currency pair.
Why USD/MXN Is Worth Watching Now
Friday’s surge in value did run into headwinds going into the weekend and market action in the USD/MXN remains within the lower elements of its technical charts. However, day traders deciding what to do in the short-term might want to first sit back in their chairs and reflect on the ability of sudden storms to change the playing field completely.
Not only did Federal Reserve Chairman’s Warsh speech come across surprisingly cautious, but this morning has been dealt another escalation of military conflict from the Middle East. Financial institutions which were hoping for calm conditions to continue which had been seen in some respects the past couple of weeks as prevailing sentiment caused USD centric weakness, have now seen tranquility smashed. There will be plenty of swift trading in the USD/MXN today.
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Dollar Sentiment Has Shifted After Recent Volatility
The USD/MXN is trading near the 17.01600 mark now. Fast changes in value are being seen as large players and financial institutions try to regain their balance per the changing perspectives dealt over the past couple of days. On Friday before the Kevin Warsh speech at the Jackson Hole Symposium the USD/MXN was trading below the 16.95000 ratio. And early last week the 16.90000 level was being challenged periodically.
The jump upwards upon the cautious sounding speech from the Fed Chair took the USD/MXN upwards in a hurry and the 17.06500 mark was flirted with momentarily on Friday. This morning’s action, even in the wake of the Iranian and U.S conflict has actually seen lower ratios become sustained. However, day traders awake and pursuing Forex now, need to remember volume will increase in the USD/MXN over the coming hours and more nervous sentiment might be demonstrated. Risk taking tactics need to prepare for increased tension among North American financial institutions later today.
USD/MXN Tests the Meaning of the 17.00 Level
The lower depths of the USD/MXN remain intriguing. The jump higher on Friday ran into headwinds and the currency pair is once again within sight of the 17.00000 ratio which many financial institutions likely see as a barometer. While many retail speculators may be nervous about current conditions and what will happen in a couple of hours, trying to weather the Forex storm may still prove difficult, particularly as large players themselves deal with new developing circumstances.
Short and near-term perspectives are likely to see a rapid test of shifting winds as liquidity increases later today and folks contemplate their confidence (or lack of it). Today and tomorrow in the USD/MXN are likely to produce choppy trading for retail speculators that will need careful attention to technical and sentiment powers.
USD/MXN Price Chart
Why the Recent Dollar Bounce May Lack Follow-Through
The lower momentum seen in the USD/MXN was not surprising the past week . The upwards swing created on Friday certainly caused a reversal, but not one that created a new realm for the currency pair. The temptation to believe that bearish activities in the USD/MXN will remain intact should not be discounted, financial institutions likely continue to believe the Mexican Peso can move lower. However, for this to happen another dose of impetus will be needed to drive the USD/MXN lower in the near-term and this may be hard to find. Traders need to be cautious today.
What Traders May Be Underestimating in USD/MXN
The USD/MXN has delivered a sincere trend lower in the past week, but its upwards climb on Friday now leaves open questions regarding short-term wagering. The currency pair has seen a sustained value range this morning, but when volumes increase in the coming hours speculators should expect additional volatility. Traders looking for momentum and moves higher based on nervous sentiment need to be careful, because shifting tides may prove dangerous today.
Levels That Could Shape the Next USD/MXN Move:
Current Resistance: 17.01850
Current Support: 16.99990
High Target: 17.04100
Low Target: 16.98600
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