The US dollar was very noisy during the trading session on Thursday as the questions about the Middle East and what's going on with the overall risk appetite and demands of the bond market continue to be unclear.
As interest rates in America continue to climb that does help the US dollar, but against the Mexican peso it's a little bit of a different scenario in the sense that you quite often see the markets favor the Mexican peso despite the fact that the US economy is the main driver. After all, Mexico is the largest exporter to the United States and as a result so goes the American economy so goes the Mexican economy.
The Mexican peso has a higher interest rate attached to it than the US dollar and that will continue to be the way forward. If we break down from here the 17 Mexican peso level could be targeted as it is a large round psychologically significant figure, but I also understand that there's a lot of noise there previously.
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If we rally from here the 17.40 level will be an area of resistance, especially as the 50-day EMA is going to be a bit of a barrier as well. I love shorting rallies especially when they show signs of exhaustion particularly on the daily chart.
I understand that you get paid to short the USD/MXN pair at the end of every day and that continues to drive most of my trading decisions. This pair continues to look bearish to me over the longer-term.
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