We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • $USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here:https://t.co/5GO9UrvO4y https://t.co/OTTEmg76W8
  • The immediate focus is on a break of this multi-week consolidation formation in the Australian Dollar with the broader rally vulnerable while below 7042. Get your AUD technical analysis here: https://t.co/iEYos1ioBc https://t.co/kuzB3Eqps0
  • #Gold prices have rallied to nine-year highs with the breakout testing multi-year uptrend resistance into the open of Q3. Can the rally be sustained? Download our latest Gold trading guide!: https://t.co/3KO2QWOnOt https://t.co/YIIGZdeIAJ
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here:https://t.co/Fkzk88Y5gm https://t.co/zerRXZC1Tq
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkd4B0k https://t.co/uj93z2SHpH
  • The Australian Dollar’s surge from the March lows may be coming to an end as bearish patterns begin to line up on multiple time-frames. Check out our #AUD trading guide to learn more here: https://t.co/pjfm07tqFd https://t.co/VypHLra1ER
  • The Evening Star candlestick is a three-candle pattern that signals a reversal in the market and is commonly used to trade forex. Learn more about the evening star candlestick pattern here: https://t.co/8OTE7m01IG https://t.co/Vumcng7UB3
  • After a miraculous recovery in Q2, equity markets will be left juggling the Fed’s policy and the threat of a second covid wave, all in an election year. Evidently, traders will have their hands full in Q3. Read our equity forecast here: https://t.co/JARqbOKIeM https://t.co/Ms6zEucjqg
  • Hey traders! I'm sure you've all heard about trend trading. Sharpen your knowledge here: https://t.co/jkliL5sxj7 https://t.co/uvlv1MCAHI
  • $GBPUSD posts impressive Q2 recovery, however, what upside challenges lie ahead in Q3? Download our #GBP trading guide to find out: https://t.co/ZE0yjc6wdQ https://t.co/bFa90VJYor
USD/MXN Outlook: Banxico Steps in but Risk Sentiment Continues as Main Driver

USD/MXN Outlook: Banxico Steps in but Risk Sentiment Continues as Main Driver

2020-06-28 04:00:00
Daniela Sabin Hathorn, Analyst
Share:
Mexican Peso Chart

Source: IG Charts

Main USD/MXN Talking Points:

  • Banxico reduces key rate to 5%
  • The Peso continues to be attractive to investors profiting from carry trades
  • USD/MXN respects the uptrend support as the pair heads higher

The Mexican Peso was unable to retain buyer interest leading USD/MXN to end the week higher. Volatility seems to have returned as new Covid-19 cases continue to emerge around the United States and Latin America, a situation that benefits only the Dollar.

As an attempt to ease worries about the Mexican Economy, Banxico - Mexico’s Central Bank – announced on Thursday that they were cutting interest rates by 50 basis points to 5%, amounting to its 9th consecutive cut, bringing the rate to its lowest since September 2016, when it stood at 4.75%. Despite the rate cut, the central bank has remained quite cautious with its monetary policy, as the Peso still enjoys the benefits of traders looking to profit from carry trade, with an inflation-adjusted interest rate that remains much higher than those of developed currencies.

In their policy statement, the Monetary Policy Committee noted that the measures taken to prevent the spread of Covid-19 had significantly affected economic activity worldwide, and inflation expectations had fallen to undesirable levels, allowing for interest rates to continue to be depressed. The central bank expects the contraction seen in the first quarter to have been exasperated in April, so the data for the second quarter may be much worse, despite the fact that the economies have started to slowly recover.

This is likely to leave the Peso struggling to find support in the coming days, especially with new virus cases rising at an undesirable rate in the American continent. The shift of capital towards safe-havens like the Dollar will lead USD/MXN to halt recent declines as traders focus on finding an equilibrium between the positivism generated by the re-opening of economies and the reality that the road ahead is going to be tough, which will continue to hinder risk sentiment.

USD/MXN daily chart (5 February – 26 June 2020)

USDMXN

Since the lows seen on June 9, USD/MXN has been edging higher, but gains have not been easily kept. We have seen a clear increase in volatility, which has left an uptrend line marked by the higher lows. As mentioned last week, recent gains have made entry more attractive to speculative sellers, and on Thursday we saw a rejection at 22.98, leaving it as a key resistance area in the coming sessions. A closeabovethis level has meant a chance to re-enter into the 23 pesos per dollar area, where the 38.2% Fibonacci retracement converges, leaving bulls heading for May's highs at 24.89.

If bulls are rejected again, it would be key to see a break in the uptrend line to confirm that sellers are regaining control. A close below 22.40 puts support at 22.17, where the 50% Fibonacci retracement converges, with the goal of falling back below 22 and returning to the bearish path below 21.45.

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.