US dollar rose against the Mexican peso on Friday, as we continue to see a lot of interest rate moves driving things forward.
USD/MXN
US dollar rallies a bit in early trading on Friday as we continue to see the interest rate differential whittle away between these 2 currencies. That being said, we are sitting near the 200-day EMA which of course offers a significant amount of resistance as it is a barrier and a technical indicator that a lot of people will be watching.
The 18 Mexican peso level is an area that a lot of people will be watching very closely as it is an area that's been important for several weeks now. As the war rages on in the Middle East, it makes a certain amount of sense that we would continue to see the US dollar somewhat strengthen.
Middle East Tension and Interest Rate Resilience
Any signs of weakness here I think probably are married to the idea of interest rates in America dropping suddenly. This could be more of a “risk on” type of move; perhaps good news coming out of the Middle East would have people looking to get away from the greenback at least in the short term.
Longer term though, I have to ask questions about this area because we have to make a decision as to whether or not the US dollar continues to go higher. It's interesting to note that the last 3 weeks have formed a hammer and that is a significant sign that there's at least some resilience to the greenback.
If the market were to see the US dollar rally, I don't know that I would be overly excited about buying though because of the interest rate differential that you would be paying. On a breakdown below the 17.80 level though, I do think it's time to start shorting again. For what it's worth, this will be all about interest rates and the interest rate market, but unfortunately, that is driven by the latest announcement coming out of the Middle East.
Potential signal: I am selling at 17.80 with a stop at 18.05 and a target of 17.50 below.