- The US dollar initially rallied during the trading session on Monday to reach the 50 Day EMA.
- The 50 Day EMA is an indicator that a lot of traders have been paying close attention to in this pair, as it is very technically driven.
- Furthermore, it’s also a pair that is very localized. In other words, it is mainly traded during the North American session, as it features a lot of cross-border traffic.
Ultimately, we need to pay close attention to the idea of what happens in the United States will have a major influence on the Mexican peso. If the US economy starts to slow down, that works against the value of the Mexican peso as Mexico sends over 85% of its exports into the United States, so with the same thing as having your biggest customer have financial issues. If that ends up being the case, then it ends up hurting the Mexican peso and by extension, the Mexican economy.
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Trend is Still Down
The trend in this pair is still very much down, despite the fact that we’ve had a couple of days of bullish pressure, as the market is hanging around 50 Day EMA, which is sitting just below the crucial 19 MXN level. The 19 MXN level is an area that I think a lot of people are paying close attention to as it is a large, round, psychologically significant figure. This of course is an area that’s been important multiple times in the past, so I think we need to pay close attention to it if we do get anywhere near there.
If we were to break above it, that would obviously change a lot of things but right now it looks like at the end of the day we are starting to see sellers come back into the market, perhaps trying to push the US dollar back down to the 18.50 MXN level. Anything below there could really open up the “trapdoor” to lower pricing. Keep in mind that interest rate differential still favors the Mexican peso.
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