Common sense tells us that sentiment in the global markets has an effect on many financial assets. However, as many other currencies have been able to gain value against the USD, the Mexican Peso remains in a rather middle of the road mid-term range. The values of the USD/MXN allows speculators the ability to take advantage of this range and play both sides of the coin with buying and selling positions depending on their technical insights.
Mexico’s economic worries have created a murky outlook regarding the ability and scale for economic recovery when the dust finally decides to settle from coronavirus. However, the nation is moving ahead in official capacities and trying to entice Asian manufacturers to set up business.
It is being reported that Mexico is trying to convince Asian companies that produce steel and other industrial products to locate facilities in Mexico. Many Asian manufacturers are being watched closely by the US and face potential tariffs. The ability of easier access to sell into the US, under the constructs the Mexican trade deal may allow foreign companies an alluring way to enter the US market.
The current range of the USD/MXN remains transfixed within a consolidated range. A value band of 22.25000 and 22.60000 has dominated recent trading. This range will allow experienced speculators an opportunity to test short term trends while using limit orders. Traders will have to pay close attention to their forex platforms in order to participate in the USD/MXN, but if a position to buy the USD/MXN is placed between values of 22.33000 and 22.36000 to look for short term bullish sentiment and a test of resistance above, this may prove worthwhile.
On the other hand, if a trader has patience and waits for short term resistance junctures between the 22.45000 and 22.50000 levels to be touched, shorting the USD/MXN may prove attractive while looking for support levels near the 22.30000 mark. Proper use of leverage and stop losses is crucial while trading the Mexican Peso.
However, within its current trading environment and due to the economic shadows hovering over Mexico it appears it is unlikely for a violent bearish trend to emerge, even as risk appetite has been seen in other parts of the world. Short term outlook for the USD/MXN still seems to indicate the forex pair will consolidate and stay within its current value band. Thus, buying positions near support levels and a search for reversals upwards may be the best decision.
Mexican Peso Short Term Outlook:
Current Resistance: 22.5000
Current Support: 22.30000
High Target: 22.60000
Low Target: 22.25000
