USD/MXN Forecast: Bullish The final two weeks have been probably the most risky and thrilling in USD/MXN in a superb few months.
USD/MXN Forecast: Bullish
The final two weeks have been probably the most risky and thrilling in USD/MXN in a superb few months. The latest strikes in bond yields have triggered the US Greenback to perk up from its latest lows, hurting high-yield risk-on currencies just like the Mexican Peso, inflicting USD/MXN to shoot as much as 21.62, earlier than coming again down once more as yields noticed some corrective stress these previous few days, leaving the pair simply above 20.50.
US 10Y Yield and DXY Each day Chart
USD/MXN Each day chart
It’s onerous to seek out a lot to say about USD/MXN aside from its response to the bond market on condition that it appears actually the one elementary driving drive in the mean time. The Covid-19 scenario continues to be a grave concern in Mexico and the financial outlook doesn0t appear to be bettering anytime quickly, however the pair is prone to proceed trending downwards if the US Greenback depreciates on the again of falling yields, and the other would occur if yields proceed to rise.
From a technical standpoint, the correction seen this previous week appears barely overstretched, one thing just like what had occurred the earlier week when the bullish run had run out of steam, so a brand new break above 21.00 could also be so as within the subsequent few days. I’m not stunned to see that USD/MXN stands the place it at the moment is, principally as a result of I had been hinting that the failure to proceed testing the descending help line was a transparent signal that purchaser momentum was selecting up.
I’m barely stunned to see how the upside correction gathered tempo so rapidly and broke previous key Fibonacci ranges with out situation, however I suppose bulls had been gathering for some time. 21.62 is an effective shout as a resistance space and I count on it to proceed attracting promoting stress if bullish momentum picks up once more, though we might even see some preliminary resistance across the 61.8% Fibonacci (21.19) this time round.
Fibonacci Confluence on FX Pairs
If this push increased in bond yields fails to materialize, it might be protected to count on the US Greenback to move decrease once more, which may carry a potential fall under 21.50 for USD/MXN, at which level the 50-day easy shifting common may supply some short-term help at 20.35 earlier than the 76.4% Fibonacci (20.18) comes into play once more.
Beneficial by Daniela Sabin Hathorn
Constructing Confidence in Buying and selling
— Written by Daniela Sabin Hathorn, Market Analyst
Observe Daniela on Twitter @HathornSabin
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