- During the trading session on Monday, we’ve seen the US dollar rally a bit against multiple currencies.
- And of course, the Mexican peso was never going to be any different. The market has been consolidating for some time. And quite frankly, I don’t know that changes anytime soon mainly due to the fact that a lot of the reasons that we have been seeing the US dollar grind back and forth against the Mexican peso are still very valid.
- We are still waiting to see how the whole trade war plays out, but I anticipate that we may see some type of resolution sooner or later. After all, the Mexicans are at least making attempts to deal with the cartel, and more importantly, in the short term, the border. And if that’s going to be the case, I anticipate that there will be something worked out between the Mexicans and the U.S.
- If that’s the case going forward, it should help the Mexican peso. But at the same time, we have major issues with the Mexican economy. So that will come into play.
The Range Continues
Ultimately, we have been consolidating for some time, and it looks like the technical analysis remains fairly neutral, although we had been bullish quite drastically before then. When you zoom out on the charts, you can see that the area between 20 pesos and 21 pesos has been important multiple times in the past, and that’s essentially where we are now. This pair does have a long history of being very choppy. And at that point in time, you need to recognize that this is more of a grinding market than anything else. Keep in mind, remittances have a huge influence on the Mexican peso as a lot of Mexicans end up in the United States working here and then sending their money back to Mexico. There are mass deportations, some done by the government, others done by self-deportation going on at the moment, and I think the currency markets are somewhat in flux because we are trying to determine whether or not that will change the way this market behaves. After all, a huge part of the flows have been out of the United States and into Mexico from migrants. There are other things, obviously, that come into the picture, but right now we’re in a state of holding, and I think we’re just holding in the same range.
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