Test of Range Producing a Short Term Fight Lower

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The USD/MXN continues to demonstrate an attractive price range for speculators who have the ability to monitor and react quickly to the currency pair’s gyrations.

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The USD/MXN is once again trading below the 20.00000 ratio. The price of the USD/MXN currency pair as of this writing is near the 19.96000 mark. Support levels near the 19.94000 mark should be monitored which were seen on Thursday of last week. The USD/MXN like all major currency pairs has been hit by swift changes of value over the past week, but the Forex pair is rather unique.

The USD/MXN Remains a Rather Stable Currency Pair

While many other currencies have suffered deep losses of value against the USD in the past year, the Mexican Peso is not one of them. The USD/MXN has certainly seen volatile highs and lows, but its price range has been much more stable than many other currency pairs. In fact one year ago the USD/MXN was trading near the 20.39000 level. How many other global currencies can say they have a stronger value against the USD now compared to one year ago?

The rather choppy short term range in the USD/MXN has been rather consistent too. Yes, fundamental considerations affect the Forex pair because of the U.S Federal Reserve hawkish interest rate policy, but counterweighing this effect has been the higher value of Crude Oil, which Mexico is a large producer. The recent price of Crude Oil has been trading between 84.00 and 90.00 USD.

Global Market Conditions Remain Nervous and the USD/MXN will react

While global market conditions remain fragile and have seen whipsaw results in the major equity indices, the value of the USD/MXN has been rather range bound. The ability of the USD/MXN to trade below the 20.00000 level and flirt with support below early this morning is another indication the currency pair may simply continue to test its rather consistent values. Another move towards support may prove tempting for speculators.

If the USD/MXN challenges the 19.94000 level and actually penetrates lower, a retest of the 19.90000 would not be a surprise.
The rather consolidated price of the USD/MXN in early trading today without large fluctuations may prove an opportunity to speculate on targeted small moves for traders who use conservative risk management.

Traders may want to use stop losses slightly above the 20.0000 level and use resistance to ignite selling positions of the USD/MXN. Take profit positions should be kept realistic, but goals of 19.94600 to 19.92500 could be tempting for speculators using conservative amounts of leverage and who believe more downward price momentum will be generated for short term wagers.