- The US dollar initially rallied a bit during the trading session on Friday only to give back gains again.
- It looks like the 18.5 pesos level is going to continue to be a major area of support.
- But if we were to break down below there, then the market will probably drop down to the 18 pesos level, possibly even the 17.5 level.
Rallies at this point in time will continue to see the 18.8 level offer resistance and most certainly the 19 level. Keep in mind, this is a market that moves inverse of what you would think in the sense that the better than the U.S. economy is doing, the better the Mexican peso does against the U.S. That is because the interest rate differential most certainly favors the Mexican peso. But we also have the fact that Mexico sends something like 85 percent of its exports into the United States.
Why is this Pair “Upside Down” at Times?
So, America is Mexico’s biggest customer. This means that as the US economy goes, so goes the Mexican economy. With this being the case, I think you’ve got a situation where we’ve been in a nice downtrend for a while. And therefore, I think you would have to assume more of this continues. And it certainly was the case on Friday, as at one point, it looked pretty ugly. And then we fell right back down. I am a believer that eventually we break down below the 18.5 level, but it may take several days to do so.
This is a pair that tends to move very suddenly and then grind back and forth. Remember that it is primarily traded in North America. So, it’s also a market that you need to make sure that you’re trading at the right time of day. For example, when the U S session started during the day here on Friday, this candlestick was basically at the top of the range. And then the Americans and the Mexicans get on board and can see it fell right back down. That being said, I remained bearish, but I looked for bounces to take advantage of.
Ready to trade our Forex daily analysis and predictions? Here are the best forex brokers in Mexico to choose from.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.