The USD/MXN is about to encounter another week of loud trading conditions based on the ongoing tariff rhetoric coming from the U.S White House, short-term traders need to be ready for fast changing values.
The USD/MXN after traversing below the 20.00000 momentarily last Tuesday began to see a solid reversal take place. As the currency pair went into the weekend the USD/MXN finished around the 20.40000 vicinity and in early trading today 20.39600 mark is being seen as of this writing. Traders need to expect wide spreads in the USD/MXN early this week. Traders need to also be braced for the potential of massive volatility. The USD/MXN is likely to remain fast over the next three days.
Day traders with a sense of adventure that want to bet on upside in the USD/MXN based on the notion that at some point the Trump White House is going to issue a rather explosive remark may be proven correct. Trump certainly has a tendency to launch loud diatribes at his opponents and Mexico is clearly seen as a negotiating competitor. However, President Trump also has a tendency to then take a step back and offer a glimmer of hope based on the prospects of good results via a potential agreement.
USD/MXN Betting on Worst and Best Case Scenarios
The shadows of tariff negotiations will boil early this week and may find resolution. The White House having already postponed some tariff sanctions against Mexico, may now be in a position where they have to prove they can deliver more than barking. In other words, Trump may feel compelled to take actions this week that financial institutions will not be comfortable with, but then again he may step back from the precipice and say Mexico and the U.S have found room for agreement too.
The USD/MXN is likely to get a lot of attention early this week. Speculators will need a full array of risk taking tactics if they want to wager on the currency pair. Preparing for best and worst case scenarios will means that volatility is expected – and it should be. The USD/MXN is trading within sight of important resistance and fast fluctuations should be anticipated today through the 2nd of April.
Resistance Levels Should be Watched Near-Term
Loud rumors are certain to swirl regarding negotiations between Mexico and the U.S and financial institutions will be nervous. Reactions will likely be swift.
- Day traders looking to participate in the USD/MXN may want to use take profit orders that look for realistic targets, while also using stop losses that are a bit wider than normal to allow for some volatility.
- This means USD/MXN traders will also need to use conservative leverage so they do not get brutalized by a sudden shift in sentiment, which causes price velocity to happen in a direction that was not anticipated.
USD/MXN Short Term Outlook:
Current Resistance: 20.40100
Current Support: 20.36900
High Target: 20.44200
Low Target: 20.34100