- The US dollar was very strong during the trading session on Monday as we continue to see the US dollar swallow most things.
- All things being equal, the Mexican peso of course is an emerging market currency, and therefore it’s likely that we will continue to see a lot of weakness.
- This is a market that has been very strong for some time, and despite that we have seen during the trading session on Monday suggests that are going to continue to go higher.
Technical Analysis
The USD/MXN Market is a one that has been quite wild during the trading session on Monday, as we had broken above the 20 Mexican pesos level. Breaking above that level did trigger a lot of profit-taking, but at this point in time I suspect that it is only a matter of time before we start buying again, with the 19.15 level being an area of particular interest. In general, it’s likely that we can continue to see a lot of volatility, but the upward trajectory still favors the US dollar, especially as it is a major “risk off” attitude takes course across the world.
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If the market were to break down below the 18.55 level, then the market could drop down to the 50-Day EMA, which sits right around the 18.10 level. It’ll be difficult to get down there after this type of mood, and quite frankly I think you will continue to see a lot of upward momentum, but it will take quite a bit of patience to realize the gains that you could be earning. Another thing that you need to be cautious about is the fact that the interest rate differential most certainly favors Mexico, so I think the upward trajectory could slow down from time to time, but it is clear to me that the world favors safety at this point, and that certainly will not be found in Mexico.
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