USD/MXN – Dollar vs Peso Price Action, the Good and the Bad
- USD/MXN highlights good and bad properties right now
- Pattern continues to build while range narrows
USD/MXN, the good and the bad...
USD/MXN remains caught in a choppy range, which generally has traders looking for a directional move frustrated. This could continue. That is the bad news. The good news is that these prolonged periods of price action that are sideways to narrowing typically lead to strong tradeable moves once price breaks free.
This has remained the bias in recent weeks and will continue to be the case as long as price holds up, but USD/MXN after the Q1 surge, like other $/EM pairs, remains positioned for higher prices. The relatively shallow depth of the retracement in late March met by a persistent bid suggests eventually the top-side will give-way to buying pressure.
But this could take some time, which means traders will need to be patient. Looking at the developing wedge formation it might take out into June before we see a breakout. However, we need to be prepared for it to happen at any time.
To push the bullish bias into aggressive mode we need to see a strong push over 25, ultimately breaking above the high at 25.77. In the event this happens then a sizable rally towards the 28-30-area could be in the works. On the flip-side, if we see 23.27 and 22.83 break, then we need to consider a bearish alternative.
For now, range traders may look to fade – but should be careful if momentum comes in and levels start breaking. USD/MXN is known for its sudden and powerful price moves.
USD/MXN Daily Chart (narrowing range continues…)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.