- The US dollar has been a little bit negative against the Mexican peso during trading on Thursday as we’ve seen the US dollar turn around quite a bit.
- This will be an interesting pair to watch because the preliminary GDP numbers came in at a contraction of 0.2 % in the United States and while that did take some of the wind out of the sails of the US dollar.
- The reality is that Mexico is almost wholly dependent on the US economy to grow.
After all, almost all of Mexico’s exports end up in the United States. And therefore, if the United States has trouble, so does Mexico. The 19.50 Mexican pesos level above is resistant. So, if we start to see a move to the upside, we could very well see trouble there.
Technical Indicator
The 50 day EMA is breaking below the 200 day EMA kicking off the so called death cross, which is actually the normal state of things for this pair over the last several years. So, I think as long as the Mexican economy is anchored to the US economy, this pair might move inversely from what you expect. If the US economy really starts to strengthen, then you’ll see the US dollar fall against the Mexican peso quite rapidly. This is because of all of the exports Mexico sends to the Americans.
I think at this point, we are trying to reach towards the 19 Mexican peso level, which is a large round psychologically significant figure in an area where we’ve seen some action previously. Rallies at this point in time, I think, are still going to be selling opportunities at signs of exhaustion, and that’s how I’m playing this market. I don’t have any interest in buying the dollar against the peso, at least not at the moment. Things can change and they quite often do, but right now this looks like a market that is still trying to break lower.
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.
