USD/MXN PRICE OUTLOOK: DOLLAR-PESO SEARCHES FOR SUPPORT AS CRUDE OIL PULLS BACKUSD/MXN worth motion is gyrating round its 200-day
USD/MXN PRICE OUTLOOK: DOLLAR-PESO SEARCHES FOR SUPPORT AS CRUDE OIL PULLS BACK
- USD/MXN worth motion is gyrating round its 200-day shifting common
- US Greenback searches desperately for assist as commodity currencies strengthen
- Mexican Peso might come underneath stress if there’s a resurgence of volatility
USD/MXN costs have edged steadily decrease over the past couple months. This comes because the US Greenback surrenders positive factors notched towards the Mexican Peso – and different commodity currencies just like the Canadian Greenback, Norwegian Krone, or Australian Greenback – earlier this yr in the course of the onset of the coronavirus pandemic. But, regardless of weakening over 10% since March, the Greenback-Peso nonetheless trades greater by greater than 15% when measured from its January opening stage.
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USD/MXN PRICE CHART: DAILY TIME FRAME (19 MAR TO 31 AUG 2020)
Web of those strikes, spot USD/MXN worth motion now gravitates barely under its 200-day shifting common, which resides close to the 21.900-mark. That stated, after breaching this key technical stage late final week, the US Greenback seems weak to a different leg decrease towards the Mexican Peso. If USD/MXN bulls can reclaim this barrier, nonetheless, it might encourage them to focus on the 50-day shifting common or 23.6% Fibonacci retracement stage outlined on the chart above. Alternatively, if the bearish medium-term development prevails, the 08 June swing low might function a possible draw back goal for USD/MXN bears.
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USD/MXN PRICE CHART & CRUDE OIL OVERLAID: DAILY TIME FRAME (27 MAY TO 31 AUG 2020)
Maybe the path of crude oil might point out the place spot USD/MXN worth motion heads subsequent. The Greenback-Peso tends to holds a robust inverse relationship with crude oil worth motion, which is indicated by the damaging correlation coefficient typically maintained. The Mexican Peso is intently tied to fluctuations in oil costs seeing that Mexico is among the world’s largest producers and exporters of crude oil. Additionally, the connection between crude oil and USD/MXN is just like the connection between crude oil and USD/CAD.
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Correspondingly, there’s potential for USD/MXN costs to proceed drifting decrease whereas the worldwide economic system sustains its restoration and crude oil advances additional. This brings the discharge of PMIs and jobs information all through the week into focus for a well being test on underlying financial situations. On that word, it’s value mentioning how a resurgence of market volatility and danger aversion seemingly stands to ship USD/MXN worth motion snapping again greater.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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