The US dollar rallied significantly again against the Mexican peso on Monday as there has been a general “risk off” attitude to the markets. Beyond that, President Donald Trump has recently suggested that he was going to continue raising tariffs against Mexico if they did not do something about border crossings. This is more than likely going to be seen as detrimental to the Mexican peso, but at the end of the day the Americans and the Mexicans are meeting soon, and this is probably just going to end up being a negotiation tactic.
We have already seen the Mexican president suggested that they were willing to work with Donald Trump, so it’s very likely that we will see this diffused soon enough. That being said, we have broken towards the 19.80 pesos level, and have had an extraordinarily strong candle stick form from the Friday session as well. Ultimately, it looks as if we are going to go looking towards the 20 pesos level.
Pullbacks at this point should be thought of as buying opportunities, with the 19.50 pesos level looking to be supportive based upon the psychological importance and of course the short-term charts. Even if we break down below there, it’s likely that we should see support down at the 19.25 pesos level. A move below there puts a lot of things into question.
Another thing that could be working against the value of the Mexican peso is the crude oil market. If the crude oil markets continue to get hit hard, it’s likely that the Mexican peso will suffer. I do anticipate that the 20 pesos level above is going to cause a lot of resistance, so a break above there could open up the door to the 20.50 pesos level above.