- The US dollar has risen again against the Mexican peso during the early hours on Friday as we are now well above the 50 day EMA.
- This is a market that I think continues to be very volatile and with all of the noise and nonsense going on about the tariff wars, you will continue to see wild moves in various markets.
- That being said, I think the biggest concern here isn't necessarily tariffs on Mexico because Mexico is for the most part making the United States pretty happy with some of the things that have been a point of contention.
This has more to do with the fact that the global economy looks like it's going to be hurt. And if that's going to be the case, the Mexican peso is going to be hurt after all Mexico is an export country and almost solely depended on sending things to the United States.
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Stagflation in America?
The concern now in the United States is that stagflation could be coming, and if that's going to be the case, Mexico's biggest customer may have issues. And while it's a little counterintuitive, the Mexican peso actually performed better if the United States is performing better. All of this being said, it is an interest rate swap differential that keeps me from buying this USD/MXN pair very often.
But ultimately, I think at this point, it wouldn't surprise me at all to see this market try to get back to the 21 Mexican peso level. Underneath we have the 19.9 Mexican peso level offer in support with the 200 day EMA sitting just below there. At this juncture, I have the look of a somewhat neutral market in front of me, and that's pretty much how I'm playing it. I think we're just stuck in the same range we've been in since November.
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