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
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
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
Wall Street
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
Gold
Bearish
GBP/USD
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
USD/JPY
Bearish
More View more
Real Time News
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/Uz6LKXdR2k
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/fGi6YgqqQt
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/fdigOgkmio
  • A forex trader is strategic, disciplined and always switched on to the markets. Learn how to build an FX mindset here: https://t.co/tB3aAErd70 https://t.co/Ilqz8BWTk0
  • The final ‘full’ week of the year brings about the last wave of significant event risk from around the globe, including three central bank rate decisions (Fed, BOE, & BOJ). Get your market update from @CVecchioFX here:https://t.co/PhqxSPlngI https://t.co/XX57vSjQwV
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/HOvzuOICQx
  • Ever wonder if there are other chart types that can be sued for technical analysis? HLOC charts are discussed in the following article as well as their pros and cons. Learn more here: https://t.co/qV3c7a4YR3 https://t.co/32hYzqhuZ9
  • The Australian Dollar sits on the crossroads of Treasury yields, the S&P 500 and US fiscal stimulus expectations. Will $AUDUSD gains slow? Chinese Q4 GDP and Australian jobs data are due. Get your market update from @ddubrovskyFX here: https://t.co/BsYmmWFYOH https://t.co/HhLqb2iVgk
  • #Gold prices have come under significant pressure to kick-off 2021. However, the formation of bullish technical patterns across multiple timeframes suggests that a rebound higher may be at hand. Get your market update from @DanielGMoss here: https://t.co/Dpf8N4Fh0T https://t.co/pnZpnM9yT5
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/yCtLFemdNc
MXN 1Q Forecast: Mexican Peso Outlook - USD/MXN Bearish in 2021 as Recovery Persists

MXN 1Q Forecast: Mexican Peso Outlook - USD/MXN Bearish in 2021 as Recovery Persists

2021-01-03 10:00:00
Rich Dvorak, Analyst

MXN 1Q Forecast: Mexican Peso Outlook - USD/MXN Bearish in 2021 as Recovery Persists

Advertisement

The Mexican Peso looks positioned for a prolonged advance against the US Dollar in 2021. This could present bearish USD/MXN trading opportunities with the Mexican Peso possessing potential to extend its recent bout of strength. Constructive outlook for the Mexican Peso piggybacks on rising crude oil prices and normalizing measures of volatility, which correspond with the global economic recovery since COVID-19 first roiled markets. Moreover, this bearish USD/MXN theme largely follows encouraging vaccine developments in addition to likely implications of a Biden presidency.

USD/MXN with Crude Oil & VIX Index: Weekly Time Frame (JUN 2018 TO DEC 2020)

USD/MXN with Crude Oil and VIX Index, Weekly 2018 to 2020

Chart prepared by Rich Dvorak, created with TradingView

The Mexican Peso outlook is closely tied to the direction of crude oil prices seeing that Mexico’s budget has a hefty dependence on revenue from oil exports. With the Mexican Peso generally moving in tandem with crude oil, there could be potential for USD/MXN to fall further if the price of crude climbs higher. Also noteworthy is the positive relationship typically maintained by USD/MXN price action and the S&P 500-derived VIX Index.

The VIX ‘fear-gauge’ tends to rise during episodes of risk aversion, which presents headwinds to high beta emerging market currencies such as the Mexican Peso. On the other hand, spot USD/MXN often drops alongside the VIX Index as trader sentiment and risk appetite improve. Correspondingly, the Mexican Peso might continue to strengthen as sustained market optimism causes the VIX to bleed toward pre-pandemic lows.

USD/MXN Price Chart: Weekly Time Frame (MAR 2018 TO DEC 2020)

USD/MXN Price Chart Weekly 2018 to 2020

Chart prepared by Rich Dvorak, created with IG.

Additionally, with Mexico inflation running red-hot, Banxico could disappoint dovish expectations and fuel more Mexican Peso strength. To that end, spot USD/MXN price action might remain broadly under pressure over the weeks and months head. This brings to focus potential for USD/MXN to continue gravitating lower along its bottom Bollinger Band toward possible technical support underpinned by the 18.500-price level. If a Bollinger Band squeeze materializes, however, the Dollar-Peso might recoil higher. Nevertheless, the downward-sloping 20-week simple moving average highlights the standing bearish trend and possible area of technical resistance.

Top Trading Opportunities in 2021
Top Trading Opportunities in 2021
Recommended by Rich Dvorak
Get Your Free Top Trading Opportunities Forecast
Get My Guide

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

DISCLOSURES