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USD/MXN: Another Move Higher as Resistance Proves Vulnerable

The USD/MXN continued to move higher and touched values not seen since the second week of March, as the currency pair reacted to U.S economic data and technical forces.

As of this writing the USD/MXN is trading near the 20.84000 level, this after touching a high that came within sight of the 21.00000 mark yesterday but failed to punch through with any force. While the USD/MXN did reverse lower from the high-water marks during yesterday’s trading, which was a reaction to the publication of U.S inflation data, the USD/MXN continues its trading at monthly highs.

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Higher Price Range Remains Durable and is Challenging March 2022 Values

The last time the USD/MXN traded above its current levels was in second week of March 2022, this when the currency pair traversed the 21.48000 juncture on the 8th of March before starting to falter. On the 30th of May the USD/MXN traded near the 19.45000 mark, this highlights the ability of the forex pair to create trends and speculative conditions which traders need to take into consideration. Using a conservative amount of leverage is important when trading the USD/MXN.

A sustained move above the 20.90000 could be interpreted as a bullish signal for the USD/MXN currency pair today.Choppy conditions will likely persist with the current range being tested, until U.S Retail Sales numbers are published tomorrow.

Technically, it is certainly intriguing the USD/MXN was not able to penetrate the 21.00000 level during yesterday’s trading. Behavioral sentiment is a key ingredient in trading and the failure to cross the threshold of 21.00000 may appear to be a bearish signal, but this is all about perception. Today is another day and more inflation data will come from the U.S, and tomorrow Retail Sales numbers will be published in the U.S and this is important.

U.S Federal Reserve Stands in the Shadows regarding their Interest Rate Decision in Late July

The U.S Federal Reserve is standing in the wings and at the end of this month, they will likely raise interest rates again. The question is whether a .50% or .75% increase will occur. The Producer Price Index data today and retail results tomorrow which will be published, will play a key ingredient in the U.S central banks decision.

The USD/MXN will likely maintain its current value and see a bit of choppiness before the U.S economic data. If inflation proves strong, and retail sales come in relatively strong without a dramatic setback in spending, the Fed may be forced to raise interest rates by .75%, which would continue to make the USD/MXN potentially more bullish in the near term. If the USD/MXN begins to trade above the 20.90000 level and sustain this amount, another buying surge could be generated sooner rather than later.

USD/MXN Short-Term Outlook

Current Resistance: 20.91125

Current Support: 20.74450

High Target: 21.16150

Low Target: 20.56600

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