- The US dollar struggled on Friday against the Mexican peso as we continue to see the overall downtrend take hold of this market.
- The 18.50 MXN level is an area that has offered resistance, as it had previous support.
- The “market memory” found in this area confirmed that we are still very much in a downtrend, as we have been for several months.
Interest Rate Differential and Trend
Keep in mind that the interest rate attached to the Mexican peso is stronger than the US dollar, so all things being equal, when traders are willing to take on a little bit more in the way of risk, they will often short this pair. Furthermore, you should also keep in mind that Mexico sends most of its exports into the United States, as it is the world’s largest exporter to America.
Top Regulated Brokers
In other words, if the American economy is doing well, that helps the Mexican economy. All these being equal, the exact opposite can be true as well. If the US economy starts to slow down, that means exports coming out of Mexico will not continue to be inasmuch demand.
You should also keep in mind that simply put, we’ve been in a significant downtrend for some time, and I think ultimately this is something that you need to keep in mind. After all, forex pairs tend to thrive on momentum and stay in a trend for quite some time. All things being equal, this is a market that has been in a downtrend for several months and now looks as if it may tried to target the 18.20 MXN level, an area that had been support 2 weeks ago, and then possibly even the 18.00 MXN level. On the upside though, if we were to break above the 50 Day EMA, it could be thought of as a potential violation of the overall negative trend. In that environment, we could even go looking to the 18.80 MXN level, possibly even the 19.00 MXN level after that.
Ready to trade our daily Forex forecast? Here’s a list of some of the top Mexican forex brokers to choose from.