USD/MXN – US Dollar Trying to Hold its Footing vs Mexican Peso
- USD/MXN pullback was short-lived so far
- A consolidation period would do some good for another run
USD/MXN pullback was short-lived so far
The US Dollar has been running over emerging market currencies as collectively they continue to struggle the most during these difficult times. The Mexican peso saw some relief, but that has been quickly reversed in favor of more weakness.
USD/MXN, will the bid stay in or is the current rally going to result in a lower-high scenario? If the pair is to continue on higher, a short period of basing would do it some good, indicate a willingness by buyers to keep it afloat at lofty levels. It could also give traders a better risk/reward set-up.
Looking at other USD/EMs, a congestion pattern might be the bearish outlook given how strong they are. Take USD/ZAR for instance, it is well above the March 23 pullback peak. USD/MXN might be just around the bend in following higher.
A breakout above 25.44 will get it to a new high, and from there where it stops is hard to determine given it is in record territory and the amount of pressure USD is putting on emerging market currencies. As long as USD/MXN stays above 22.83, then the consolidation scenario stays on the table.
For now, the trading bias remains broadly bullish, but with risk/reward leaving something to be desired it may be prudent to give price action some time to give a better look.
USD/MXN Daily Chart (broadly bullish, base would do some good)
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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.