News & Analysis at your fingertips.

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
Oil - US Crude
Bullish
Wall Street
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
Gold
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
GBP/USD
Bullish
USD/JPY
Bearish
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
  • The S&P 500 pushed the market's comfort with a head-and-shoulders pattern through Friday's close. What should we look for in technical patterns, overlapping fundamental tides and speculative positioning for the likes of $EURUSD next week? https://www.dailyfx.com/forex/video/daily_news_report/2020/09/19/EURUSD-Pressure-Building-while-Anxious-Traders-Weigh-Did-SP-500-Break.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/lgVJVwi8th
  • Sterling remains trapped by overarching fundamentals drivers and both $GBPUSD and $EURGBP are going to have to wait until the Brexit dust settles. Get your #currencies update from @nickcawley1 here: https://t.co/vF1K1cy0nd https://t.co/NSA7qiQihc
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/d9EmTOHyTv
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/xqbUxwWgTZ
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/Gi8LHCT5sB
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/FFmRYyx4ou
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/r7aJb4qpqc
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/ERyiY47G5H https://t.co/fIGDaDW21V
  • ...even more incredible is net speculative futures positioning in $EURUSD, rounding off from a record net long position...and it hasn't even cleared 1.20... https://t.co/SfyYTMTT1x
  • Net speculative futures positioning in the Dollar (here overlaid with the $DXY) has pushed to extreme levels commensurate to the levels in Oct 2017 and April 2018 https://t.co/JqHGgVUCqc
USD/MXN Week Ahead: Quick Rebound Shows Upside is Limited

USD/MXN Week Ahead: Quick Rebound Shows Upside is Limited

2020-08-30 05:00:00
Daniela Sabin Hathorn, Analyst
Share:

Main USD/MXN Talking Points:

  • USD/MXN spikes and then corrects to end the week
  • Banxico seems divided of the future path of monetary policy

Another week comes to a close and USD/MXN has remained pretty much unchanged. Whilst the week started off pretty flat, the Mexican Peso fell on Thursday after Banxico released its meeting minutes, which allowed USD/MXN to recover some upside momentum.

The report showed that central bankers are divided on the future of monetary policy, as some believe there is no more room for interest rate cuts whilst others wish them to keep on coming. As a reminder, Banxico has cut rates 6 times this year, taking the benchmark from 7.25% to 4.50% in less than 9 months.

Mexico’s economic data continues to show a slump in the economy, as data reported this week showed that the Mexican economy had shrunk 18.7% on an annualized basis in the second quarter of the year. Data on trade showed the industry had started picking up but uncertainty about the future of emerging market economies might keep future trade weak.

On top of that, tropical storm Laura has been threatening the Gulf of Mexico for several days, with the possibility of putting safe havens in demand again, specially as widespread media coverage can get the fear ball rolling. Despite this, the US dollar seems to be in a very weak place at the moment, with little hopes of getting out in the short term.

The US’ handling of the pandemic has lead to irreparable damage to the economy, which has left the dollar in a weak position, losing its carry trade value against many other currencies. This is likely to limit the upside in USD/MXN, which, as seen on Thursday, is likely to run into key resistance as soon as it attempts to push higher.

This means short-term direction will be provided by Mexican fundamentals, with fear and overall uncertainty a big factor of any upside corrections. The outlook continues to be bearish in the medium term, but volatility is likely to creep up as we head into the new month, and traders must watch out for short-term reversions.

USD/MXN 4-hour chart (02August – 28August 2020)

USDMXN Price Chart

From a technical standpoint, USD/MXN remains on the path towards the descending trendline support, which now hangs around the 21.75 area. Friday’s price action confirmed that 21.84 is a key support area whilst upside continues to remain capped above 22.20.

--- 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