Risk appetite has remained strong for the USD/MXN and the forex pair did break vulnerable short term support levels again yesterday. Providing impetus to speculators is the technical perception that resistance levels have also incrementally decreased. As trading progresses early today the resistance mark at 22.05000 appears to be an interesting juncture which may prove capable of holding short term if a bullish reversal were to emerge.
While global equities have gotten off to a mixed start this week, Mexican equity indices have been stable and even produced slight gains. Future markets in the US this morning are also expecting to see positive trading, which may open the door wider for speculative positions which have optimistic sentiment. The level of 21.90000 appears to be an important inflection point for the USD/MXN right now, trading is targeting this area and if the juncture can sustain values near and below it could be an indication the bearish trend for the forex pair will be maintained.
Mexico continues to face important economic questions regarding it immediate future. Reports showing a large number of small businesses are closing and do not have the means to acquire credit to reopen are troubling. With so many small businesses faltering and in peril a large amount of Mexico’s population will be challenged to find the means to support themselves. The government of Mexico has cash issues of its own and generating a plan that can create a balance which will find a good solution for its citizens, small businesses and meet infrastructure needs will be difficult.
However, speculators who are focused on the value of the USD/MXN need to understand that the value of this forex pair is also deriving energy from doubts about the US Dollar sustaining its value. The USD/MXN has demonstrated an ability to trade in a bearish direction and the Mexican Peso may find additional downward momentum which continues to tests short term support levels.
While the USD/MXN is trading at one month lows, it should be noted in early June the forex pair did trade between the marks of 21.45000 and 21.9000. There is reason to suspect because of current risk appetite that sentiment may create another decisive push into this trading range and test these lower values again.
Mexican Peso Short Term Outlook:
Current Resistance: 22.05000
Current Support: 21.85000
High Target: 22.10000
Low Target: 21.70000
