USD/MXN: retrocession

USD/MXN: retrocession

2020-09-10 • Updated

Technical view

On the daily chart below we see a gradual – with the exception of May-June – descent of the USD against the MXN. As the crisis kicked in, USD/MXN leaped to 25.50 in March, and since then has been sliding down. Currently, it trades below 21.40 flirting with June low and appearing pretty serious to cross it. Down below, we have 21.00 – that’s still within the downtrend if the price keeps the same pace.

1.png

In the meantime, a long-term view shows that even lower zones may be possibly targeted by USD/MXN – if it crosses 21.00 downwards. The support of 20.00 seems to be the most probable destination in the midterm. However, it is still in the upper zone of the trend projection (marked “1”) if we remove the Feb-Aug virus distortion. Everything below the 100-MA and especially 200-MA is also a very possible destination (marked “2”) but this will take longer to reveal. First, we have the key support of 20.00 and the 50-MA to check the bearish potential.

2.png

Fundamental view

The Mexican peso is weak because the Mexican economy is weak – relative to the American. In a stable outside environment, however, this weakness is stable and transformed into a gradual rise with intermittent periods of sideways movement – you can see it in the monthly chart below. But when a crisis hits, the background field gets disproportionately distorted, and the peso can no longer sustain all the pressure – and falls. That’s why we see spikes like this in USD/MXN every time there is a serious global or regional crisis: such as the current one, and as in 2008. After that, it comes back to normal sluggish ascension – which is what’s happening now. Getting back to normal. In this sense, going down to 20.00 appears as a natural, expected and even a duly event with USD/MXN. There are other factors for it: the USD is also trembling on the US-China bumps and Pre-election tensions. In the meantime, the MXN may get stronger on international companies moving their facilities from China to Mexico due to the said tensions. Therefore, keep watching the key levels of 21.00 and 20.00 and follow the trends with us!

3.png

                                                                                                 LOG IN

Similar

Trade Ideas on September  6-10
Trade Ideas on September 6-10

Bitcoin At the end of the past week, Bitcoin broke through the big resistance level of $50 400 and reached $51 500 after the worse-than-expected US labor data…

Latest news

What To Trade On May 23 - 27?
What To Trade On May 23 - 27?

Last week blew traders' minds!  The US dollar dropped for the first time in seven weeks after Jerome Powell's speech on Tuesday…

Can a recession be avoided? 
Can a recession be avoided? 

The pandemic continues hurting economic activity in China, the war in Ukraine is hitting the entire European economy, and the Fed's efforts to control inflation threaten to trigger a recession. 

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera