- During the session on Thursday, we have seen the euro rally quite significantly against the Mexican peso, reaching the 22.25 MXN level at one point, but it looks like the buyers ran out of any real conviction.
- Ultimately, the Mexican peso should be thought of as being oversold against a plethora of currencies, including the euro.
Technical Analysis
The technical analysis for this EUR/MXN market right now is relatively stable, in the sense that we had rallied quite nicely, only to turn around and show signs of hesitation. Because of this, I think we stay within the range that we have been in for some time, ordered by the 21 MXN level on the bottom, and the 22.50 MXN level on the top. This is very similar to how the Mexican peso is trading against the US dollar, so part of this bubbly comes down to the idea that perhaps Mexico will continue to suffer at the hands of tariffs. Furthermore, there is a real risk appetite aspect of this, meaning that much more people are willing to put money to work in Europe than they are Mexico at the moment, as there is so much uncertainty.
That being said, any pullback at this point in time could be offering a buying opportunity near the 21 MXN level, which has been fairly reliable. Anything below there could send this market reeling, but I just don’t see the Mexican peso strengthening very rapidly right now, as there’s no real reason for traders to step that far out on the risk appetite spectrum. With that in mind, I expect that each pullback should attract a certain amount of attention going forward. If we were to break above the 22.50 MXN level, then we could see the EUR/MXN para go racing toward the 23 MXN level, but I don’t think that’s going to be very likely at the moment.
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