USD/MXN FORECAST: US DOLLAR TO MEXICAN PESO MIGHT CONTINUE SURGING AS CRUDE OIL IMPLODES
- USD/MXN price action has skyrocketed 30% since mid-February but is down about 7% from its year-to-date high
- Spot USD/MXN looks like it might head back higher following a modest pullback in the US Dollar and rebound in the Mexican Peso
- The Mexican Peso remains pressured while crude oil continues to crumble as demand woes due to the coronavirus recession
USD/MXN is one of the best performing emerging market currency pairs so far this year. The US Dollar has soared nearly 30% against its Mexican Peso peer so far this year. USD/MXN price action currently trades 7% below its intraday record high notched on April 06, however, following a healthy retracement lower as US Dollar dominance lost momentum.
That said, spot USD/MXN has potential to soar back toward all-time highs as crude oil plunges further and the return of risk-aversion weighs on trader sentiment. USD/MXN seems like it has already started to resume its advance after printing a series of higher highs since April 12.
USD/MXN PRICE CHART: DAILY TIME FRAME (01 JANUARY TO 20 APRIL 2020)
This has allowed spot USD/MXN to reclaim its short-term trendline underpinned by the positively sloped 9-day exponential moving average and hints at uptrend continuation. Also, as I noted two weeks ago in this USD/MXN forecast, the US Dollar keeps showing potential to notch fresh record highs against the Mexican Peso – primarily owing to deepening recession risk and crashing crude oil prices.
These two fundamental themes seemed to have intensified over the last few trading sessions, with crude oil sliding to its lowest level since 1998 and the stock market rally at its wits end, which could strong-arm USD/MXN price action higher.
Keep Reading – US Dollar Forecast: Fed, Coronavirus Guidelines & Earnings Eyed
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
