The USD/MXN is near the 18.42900 ratio in early trading, this after experiencing a gap lower during this morning’s opening which took the currency pair to the 18.37800 vicinity.
The USD/MXN has begun this morning’s trading positioned similarly compared to its opening last week. The currency pair has experienced choppy consolidated trading correlating to the broad Forex market rather well. U.S CPI data published last Friday which showed lower than expected inflation results help propel the USD/MXN from a high around 18.4900 to lows near 18.34200 upon the news. However, before going into the weekend the USD/MXN did climb back to the higher realms of its consolidated week’s range.
Fast lower price action this morning in the USD/MXN generated a gap lower to around the 18.37800 mark, but again another buying spree has developed (although slight) and the currency pair is around 18.42900 as of this writing with a wide spread being seen. The price action in the USD/MXN has been choppy for day traders, risk management remains crucial for those wagering on the currency pair.
Waiting For The Federal Reserve
Nervous sentiment clearly remains in financial institutions as they prepare for the interest rate cut that is a certainty this coming Wednesday from the U.S Federal Reserve. Because the interest rate has been widely anticipated in financial institutions for over a month, day traders need to understand the USD/MXN reflects the expected rate cut from the U.S central bank which will take place. However, it is the Fed’s rhetoric which will move Forex via positioning based on forecasted outlooks.
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The USD/MXN has languished in a rather tight lower price realm the past handful of weeks, the currency pair is essentially trading near values it maneuvered early in October. Financial institutions appear to believe the U.S Fed will indicate it will cut interest rates again in December, but they want to hear a confirmation of this via Fed Chairman Powell this week. If the Federal Reserve sounds more dovish than expected this could help bearish perspectives for the USD/MXN.
Uncertainty Due to U.S Government Shutdown
Before day traders bet on the Fed to sound dovish on Wednesday, the short and near-term are likely to remain choppy. Speculators also need to understand the U.S government shutdown is causing important economic data to be delayed.
- The Federal Reserve may sound like it is dovish, but at the same time try to sound cautious because of a lack of official economic statistics to make judgements.
- Meaning that financial institutions may start to wager in the coming forty-eight hours on what they believe the Fed will say via perspectives and policy interpretations.
- Looking for lower price action in the USD/MXN it there is higher price action to levels around 18.43200 to 18.46000 may feel correct, but recent Forex movement shows that the creation of a solid trend has been difficult.
- Day traders may want to ride the momentum of financial institutions, but this may prove tough in the coming two days.
USD/MXN Short Term Outlook:
Current Resistance: 18.43500
Current Support: 18.41800
High Target: 18.46100
Low Target: 18.38400
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