Short term speculators are certain to see some volatility in the USD/MXN again today, this as the U.S publishes its Gross Domestic Product results later. The past couple of days in the currency pair have seen wide spreads and fast action.
The USD/MXN is near the 18.65000 ratio as of this writing with a wide spread being seen on brokers’ platforms in early trading. Yesterday the USD/MXN touched the 18.80000 vicinity with price velocity ramping up after the currency pair was essentially trading near values it currently holds beforehand. Meaning that the bullish momentum yesterday reacted to sudden impetus and then returned to known price levels.
A look at a five day chart of the USD/MXN shows the currency pair near values it has challenged the past handful of days. The USD/MXN was trading around 18.80000 plus when Jerome Powell made his speech in Jackson Hole last Friday, essentially saying the Fed is likely to cut interest rates in mid-September. Financial houses certainly sold the USD/MXN on that rhetoric, but support near the 18.60000 level has proven durable and prices have simmered slightly higher since then with the occasional outlier lower.
Waiting on Growth and Price Index Data Today
The USD/MXN like the broad market is now waiting on today’s U.S Gross Domestic Product reports. The growth and price index numbers will effect sentiment. If the numbers meet expectations this may allow for more choppy conditions in which sudden velocity moves the USD/MXN higher and lower based on known resistance and support levels.
However, if the GDP growth numbers were to come in lower than expected, this could set off alarm bells in financial institutions which could spark selling sentiment of the USD/MXN. But before day traders get set on this one dimensional focus, they need to understand the GDP Price Index could move the USD/MXN too. If the inflation number comes in higher than expected, it could actually cause the USD/MXN to move higher.
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Choppy Forex Including the USD/MXN
While the broad Forex market has seen choppy results as behavioral sentiment shifts rather quickly via short-term intraday movements, the USD/MXN has also been able to prove that it is in a bearish trend the past six months of trading.
- While the choppy reversals faced by speculators makes it difficult to wager on short-term, the USD/MXN continues to lean into the lower elements of its technical charts.
- Today’s U.S GDP numbers will effect sentiment regarding outlook for the Federal Reserve’s interest rate policy.
- The belief that the Fed could and should cut interest rates not only in September, but also in the coming months is a rather tantalizing prospect.
- Yet, today’s data via growth and inflation from the U.S will play into the trading results of the USD/MXN the remainder of this week.
USD/MXN Short Term Outlook:
Current Resistance: 18.66200
Current Support: 18.63100
High Target: 18.71200
Low Target: 18.54300
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