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. See our updated Privacy Policy here.

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
Subscribe
Please try again
More View more
Real Time News
  • 9 out of 11 S&P 500 sectors ended lower, with 76% of the index’s constituents closing in the red. Energy (-2.93%), industrials (-1.37%) and consumer staples (-1.26%) underperformed, whereas communication services (+0.23%) and information technology (+0.19%) ended higher. https://t.co/ZhikvkT3L6
  • The Japanese Yen could rise against the US Dollar and Australian Dollar as retail investors increase upside exposure in USD/JPY and AUD/JPY. What are key technical levels to watch? Get your market update from @ddubrovskyFX here:https://t.co/tZDMOGf8JI https://t.co/ECryTOl1ui
  • 🇧🇷 Interest Rate Decision Actual: 5.25% Expected: 5.25% Previous: 4.25% https://www.dailyfx.com/economic-calendar#2021-08-04
  • Heads Up:🇧🇷 Interest Rate Decision due at 22:00 GMT (15min) Actual: 5.25% Expected: 5.25% Previous: 4.25% https://www.dailyfx.com/economic-calendar#2021-08-04
  • The US Dollar put in a strong spike this morning on the back of some comments from FOMC Vice Chair, Richard Clarida. Get your market update from @JStanleyFX here:https://t.co/eegD686FEi https://t.co/FQsHwu6RjN
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.39% 🇨🇦CAD: -0.04% 🇬🇧GBP: -0.19% 🇪🇺EUR: -0.23% 🇨🇭CHF: -0.27% 🇯🇵JPY: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/y9WBLkpRXG
  • Heads Up:🇧🇷 Interest Rate Decision due at 21:00 GMT (15min) Expected: 5.25% Previous: 4.25% https://www.dailyfx.com/economic-calendar#2021-08-04
  • August is typically a risk-off month for FX markets, with the Japanese Yen and Swiss Franc the top performers. The Australian and New Zealand Dollars have declined the most. Get your market update from @CVecchioFX here:https://t.co/DeCKSRrDpz https://t.co/TMnfL74loo
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Gold: 0.07% Oil - US Crude: -0.25% Silver: -0.57% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/GePM1FoD1w
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 94.42%, while traders in France 40 are at opposite extremes with 78.72%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/oVnfHgqKie
Mexican Peso Fundamental Forecast: Election Outcome to Determine Momentum

Mexican Peso Fundamental Forecast: Election Outcome to Determine Momentum

Daniela Sabin Hathorn, Analyst
USDMXN Chart

Chart created with TradingView

USD/MXNFundamental Forecast: Bearish

Advertisement

USD/MXN has managed to buck the downward trend and has now rallied 2,9% in four days as the US Dollar picks up buyer momentum against emerging currencies and risk aversion. This is not an uncommon scenario in the cycle of forex pairs, especially given the important horizontal support highlighted in last week’s forecast, but short-term considerations are also to be taken into account.

The culmination of the US presidential elections is most likely the main factor driving price action for USD/MXN at the moment, on the back of US Dollar demand given so much uncertainty. As I mentioned a few weeks back, the long-term effect of the elections on the Mexican economy are somewhat unclear, and is likely to depend on the future of the commercial relationship between the North American countries and the stimulus efforts unveiled by the elected candidate to ensure economic recovery.

Recap - Mexican Peso Fundamental Forecast: Dependent on Presidential Election Outcome

Overall, a democratic sweep is seen as bearish for the US Dollar, which would leave USD/MXN unsupported in the short-term, allowing the pair to get back to trying to break it’s key support at 20.83. Further to the initial reaction, Biden is seen as a smoother candidate in regards to political and trade relationships, also boosting risk sentiment and therefore the Mexican Peso, so we can expect to see USD/MXN heading towards re-covid levels once the health situation stabilises.

Visit our US Election coverage page to find out more about possible market reactions and implications

But given that polling is unreliable, the US Dollar is likely to keep upward momentum heading in to the final stretch of the election run, so therefore further upside to USD/MXN cannot be ruled out, even if horizontal resistance is reached at 21.84. An unexpected Trump victory could boost the US Dollar, allowing the pair to push higher, whilst a contested election is likely to boost risk aversion and therefore appetite for the Mexican Peso is likely to falter in the short term.

USD/MXN Daily chart (20 February – 30 October 2020)

USDMXN Price Chart

The daily chart shows this perfect bounce off the horizontal support line at 20.83, a key area to break if Peso buyers wish to take USD/MXN lower. This also plays into the consolidation of the descending triangle pattern, which would point to a break lower in the medium term. There is still a way to go in upside potential, but increased selling pressure could be seen around 21.84, before attempting to break higher above the descending trendline marking the upper limit of the triangle.

--- 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