- The US dollar has been very choppy during the month of July against the Mexican peso, as we are searching for some type of directionality from here.
- I suspect that we will see more of the same noise in August, mainly due to the fact that August is typically a fairly quiet month to begin with, and this is a pair that is something that is highly specialized for a certain part of the world and a certain trading session.
- After all, there is very little volume in the USD/MXN pair outside of the North American session, and therefore the fact that Wall Street is going away for vacation could very well put this pair in a consolidation move.
Technical Analysis
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As far as the technical analysis is concerned, it’s obvious that we have been very negative for the majority of 2025. I don’t think that changes anytime soon, but a little bit of a bounce would make a certain amount of sense. The 19 MXN level above is a significant area due to the large, round, psychologically significant figure in and of itself, and of course the 200 Week EMA is sitting right there as well. Ultimately, this is a scenario where market participants continue to look at this through the prism of the interest rate differential favoring Mexico, and of course the fact that the Mexican peso tends to do fairly well when the US economy does.
Keep in mind that Mexico is the largest exporter to the United States, so if the US economy continues to be very strong, that almost certainly will help the Mexican economy as so much of its goods end up in the United States. With that being said, I think that we may get a little bit of a bounce, but I’m still looking to play short-term rallies to show signs of exhaustion, opening up an assault and attack on the 18.50 MXN level underneath, where we have of course found the little bit of support.
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