- The US dollar has been back and forth against the Mexican peso during most of the session here on Monday as we continue to bounce around just below the 19 pesos level.
- With that being the case, it is a market that I think you need to look very closely at in this area, mainly due to the fact that we sold off drastically.
- I think we just do a slow grind lower; the market had recently seen the so called death cross when the 50 day EMA breaks down below the 200 day EMA.
But I think that we are getting a little overdone. So, a short term bounce is possible. And I think you saw that on Friday, but those rallies probably got sold due to the positive swap going short in this pair. Keep in mind that the United States is going to continue to determine where we go next in the sense that if the US economy is doing fairly well, then you have a situation where market participants will be looking at whether or not the Mexicans can send their goods into the United States.
Symbiotic Relationship
Mexican firms are by far the biggest exporters to the US. That of course means there’s a symbiotic relationship between the two economies. If we break down below the 18.79 level, then I think we see a move down to the 18.6 level. That would be a continuation. And while I certainly would expect that sooner or later, I don’t think we’re going to see some massive movement less it is a shock to the system and something that has to do with maybe some of the noise or headlines or those types of things where you might see the US dollar get a little bit of a safety bid.
That being said though, even on Friday, it was only somewhat limited against the Mexican peso, which of course makes a lot of sense. Mexico has nothing to do with the Middle East.
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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.
