A known and well-practiced range in the USD/MXN continues to be seen. The current value of the currency pair is around 17.45425 this morning. Nervous trading has been seen in the broad Forex market. But before day traders are effected by those written words it is important to emphasize what looks like choppy conditions is actually a rather tight range being demonstrated by financial institutions which remain cautious due to global conditions. Wide bids and asks are causing headaches for small retail traders no doubt in the USD/MXN.
As the Iran war enters the month of May unresolved and energy prices are inflated, the USD/MXN is actually trading in a correlated manner to the broad Forex market. The Mexican Peso has lost some value, but it does remain within a long-term stronger stance. The bearish momentum of the USD/MXN may have eroded, but financial institutions have kept the currency pair within the lower realms of its technical charts when viewed over the long haul.
Full Volumes Returning Today for the USD/MXN
The May 1st holiday on Friday observed in Mexico and elsewhere as a workers holiday featured closed many financial institutions in Mexico, but the currency pair did trade. The return to full volume today could mean some added turbulence occurs in the USD/MXN early. Day traders need to remain alert to developments from the Middle East to try and judge whether that could affect sentiment.
In morning price action this morning, the broad Forex market displayed some USD centric weakness, but that did not last long. Trading has seen major currencies start to give back some value to the USD, including in the USD/MXN. The ability to traverse below the 17.40000 momentarily this morning did move into territory seen on Friday – but volumes were very low – and marks seen earlier last week. However, the higher WTI Crude Oil prices which have developed again the past couple of hours will not allow financial institutions to become optimistic, meaning risk appetite will likely decrease.
Tough Betting Conditions in the USD/MXN
The USD/MXN is likely to remain rather choppy in its known realms. Day traders should stay accustomed to the feeling for the moment that momentum will be hard to grasp and reversals will be fast and wide
Forex trading for the moment is likely to remain a battlefield of quick changes in values that stay within a known but perhaps wide price band.
Risk management needs to include profit taking in order to cash out winning wagers that are seen.
Stop loss orders in these type of choppy markets are dangerous particularly when they are too close to price action – this because spreads via bids and asks remain wide.
USD/MXN Short Term Outlook:
Current Resistance: 17.53000
Current Support: 17.41100
High Target: 17.57500
Low Target: 17.38700