Skip to Content
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. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
USD/MXN – The Grind Continues, but Has Solid Pattern Potential

USD/MXN – The Grind Continues, but Has Solid Pattern Potential

What's on this page

USD/MXN Highlights:

  • USD/MXN continues to work on wedging pattern
  • EM currencies holding up relative to DM currencies
  • Watch risk trends as fall approaches

USD/MXN continues to work on wedging pattern

Not a whole lot has changed since last week’s USD/MXN piece. Price action remains unfavorable in the short-term, but with some time that could give-way to a nice move out of a developed wedge formation.

Overall, when stepping back and assessing the big-picture, emerging market (EM) currencies are holding up well versus the USD when compared to the developed market currencies (EM). Last month saw a massive 4%+ slide in the DXY index, but EM held. This could be a sign of relative strength, and if the dollar turns higher in a meaningful manner it could bode well for pairs like USD/MXN.

Keep an eye on stocks too, there is potential with risks in the fall (ie. Coronavirus raging, U.S. elections) that stocks weaken during the most seasonally weak time of the year. A breakdown in stocks, especially if it is a full-on risk-off event, will almost certainly be a strong tailwind for USD/MXN as investors shun the high-yielding, riskier Mexican peso and other emerging market currencies.

Looking at USD/MXN from a pure technical standpoint, the wedge needs more time, maybe another couple of weeks to really mature. The trend lower from the April high suggests we could still see a breakdown, but keep an eye on the rising 200-day and 2018 high just under 21. It is near confluence with the bottom of the wedge. A breakout to the top-side is also possible. The nature of these patterns doesn’t always give the best directional cues, but does point to a pending breakout. Following its lead is the key.

For now, standing aside appears prudent until murky waters become clearer…

USD Forecast
USD Forecast
Recommended by Paul Robinson
Check out the Q3 USD Forecast
Get My Guide

USD/MXN Daily Chart (still working on wedge formation)

USD/MXN daily chart

USD/MXN Chart by TradingView

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---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.

DISCLOSURES