USD/MXN – US Dollar vs Mexican Peso, Trades Heavy in Absence of Fear
- USD/MXN continues to get shunned in absence of volatility
- Path of least resistance is lower until uncertainty rises
USD/MXN continues to get shunned in absence of volatility
Since it broke down from the long-term wedge in mid-December, USD/MXN has been heavy in the absence of any fear in markets. It took the coronavirus and subsequent risk-off event to drive the Dollar up against the Peso. Otherwise, it’s been trading mostly heavy.
The selling isn’t intense, it’s more about a lack of bids in the lower-yielding Dollar. The Dollar has been relatively strong versus developed market currencies, and even some of the emerging market currencies as well, i.e. S.A. Rand, Russian Ruble, Turkish Lira, etc., but not against the Mexican Peso.
From a technical standpoint, the breakdown from the 3-year triangle keeps pressure on USD/MXN, and even in the shorter-term the downward channel since the August high will keep this bias titled lower until a substantial rally can mount and break the structure.
Looking to near-term support, next up is the August 2018 lows around the 18.94-mark. It’s not a major low, but enough worth paying attention to. Should it clear through that point, there is a bit of an “air pocket” to the next major level of support down at 17.93, the 2018 low.
For now, the trading bias remains tilted lower, but should we see stocks sell off again then there could be another spike as there was recently. Any spike we see may be short-lived, though, as there isn’t any real urgency by the market to shun risk at this time.
USD/MXN Daily Chart (trading heavy, trend remains down)
USD/MXN Weekly Chart (long-term levels below to watch)
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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.