- The US dollar has fallen a bit against the Mexican peso during the month of October, but it is worth noting that the US dollar is starting to fight back against multiple currencies, so the Mexican peso may struggle a bit to continue to gain against the US dollar.
- Keep in mind that this is a little bit different of a currency pair, mainly due to the fact that the better the United States does, the better that the Mexican peso will do.
World’s Biggest Exporter to the United States
Mexico is the world’s biggest exporter to the United States, not China like most believed. Because of this, it’s very likely that if the US economy continues to show signs of strength, the Mexican peso should do fairly well, because its biggest customer is humming right along. Recently, we’ve seen a bit of a surprise in GDP numbers in America, perhaps suggesting that the Federal Reserve may have to stay tight a little longer than many people would have banked on. Whether or not that’s actually true is irrelevant, because at the end of the day if the US economy continues to strengthen or at least day strong, that means there will be a lot of demand for Mexican goods. That would be very good for the Mexican peso, especially as the interest rate in Mexico is much higher than the United States.
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Technical Analysis
The technical analysis for this pair is relatively negative, but you have to keep in mind that the 50 Day EMA still has not crossed below the 200 Day EMA, which currently sits at roughly 19 MXN. If the market were to see the so-called “death cross”, when the 50 Day EMA crosses below the 200 Day EMA, then it gives even longer-term traders the signal to stay short.
At this point, it still looks like a market that is likely to see a lot of resistance above, so rallies at this point in time will more likely than not continue to see downward pressure on them. In other words, we may get a little bit of a bounce but this pair should see plenty of sellers, and it’s not until we break above the 19 MXN level that the overall trend changes.
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