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Forex pairs in this Article » USD/MXN
By: DailyForex.com

The USD/MXN pair fell initially during the session on Wednesday, but as you can see got a little bit of a boost near the 13.07 handle, causing a nice bounce and forming a perfectly shaped hammer. This hammer looks very positive to me, and I believe that the US dollar will continue higher. This makes sense of course, as the Mexican peso is a currency that is greatly influenced by the oil markets, which of course look very weak at the moment.


The Mexicans drill a lot of oil out of the Gulf of Mexico, so therefore their currency does tend to react very strongly to oil markets. As they have been beat up, it makes perfect sense that the Peso would get beaten as well. Ultimately, the Mexican peso is also a gateway to Latin America as far as currency traders are concerned, as it is the most highly traded Latin currency out there.

Expect volatility, but the US dollar should do quite well.

The US dollar will continue to do fairly well against the Peso, simply because this is a "risk off" move waiting to happen. That being the case, I will buy this pair on a break of the top of the hammer from the Wednesday session as I believe we could go as high as 13.41 without too many issues.

That being the case, pay attention to the nonfarm payroll numbers on Friday as well. If the jobs number tends towards the weak side, expect this pair to go even higher. Mexico is highly sensitive to the US employment situation simply because of the repatriation of money from the United States to Mexico by migrant workers. It's not something that most Forex traders think about, but a lot of the money that is earned in the United States by Mexican immigrants is sent back home to help support family members. This of course does have a direct effect on the currency rates, as it is a relatively thin market. Nonetheless, this market does look like it's ready to trend higher, and if we can get past the 13.41 area, we could really get an upside move.

USDMXN Daily 11713


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