The USD/MXN is near the 17.47300 mark as of this writing, this as Forex volumes likely will stay rather muted because of the long U.S holiday weekend. While U.S financial markets and banks will be open today, many large players may take an extra day or two to return to their trading screens. On Thursday of last week however, impetus was delivered via weaker than expected U.S jobs numbers and the USD/MXN dove in a correlated manner as USD centric weakness appeared momentarily.
The USD/MXN which had been trading near the 17.56200 vicinity on Thursday dove to nearly 17.43800 quickly. But as volumes started to become thin, cautious trading started to be seen. Friday’s U.S banking holiday leading into the 4th of July celebrations created sideways action in light markets. Today’s early results have remained cautious.
Change of Sentiment Thoughts and Lower USD/MXN
The slightly weaker than expected Non-Farm Employment Change numbers combined with lower WTI Crude Oil prices may be enough of a combination to create the impression among some financial institutions the U.S Federal Reserve may not increase interest rates over the mid-term. However, before Forex traders and USD/MXN speculators jump into weaker USD considerations, better risk appetite in U.S equities may also needs to be seen.
The USD/MXN remains within the lower elements of its long-term price range. Day traders may be looking at the lower depths traversed by the currency pair the past handful of months and believe targets between 17.40000 and 17.20000 are legitimate. But first financial institutions will need to believe a real change of sentiment is going to be embraced. Day traders may also believe the same trading range below is attractive as a target, but they need to remain cautious.
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Institutional Direction will Lead Momentum Change
The perspective the USD/MXN should be lower doesn’t mean that it will happen. Nervousness remains a fixture in Forex. A handful of major currencies continue to struggle against the USD.
Smaller speculators need to ride momentum created by large financial institutions in the USD/MXN.
The dive lower on Thursday did run into support and larger volumes will need to be seen to sustain a trajectory lower.
Today’s price action in the USD/MXN may remain choppy.
USD centric strength may not be ready to change its cautious sentiment until U.S Treasury yields start to show they are able to decline a bit.
Day traders may be correct in looking for downside in the USD/MXN, but they need a well-managed risk taking approach.
USD/MXN Short Term Outlook:
Current Resistance: 17.47500
Current Support: 17.47100
High Target: 17.48600
Low Target: 17.45900
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