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

The USD/MXN pair rose during the session on Thursday, as the Mexican peso continues to weaken. For those of you that don't typically trade this currency, it should be noted that the Mexican peso is highly leveraged to the oil markets, as many of the rings in the Gulf of Mexico are actually Mexican owned. On top of that, think of it as a gauge on global appetite, as the Mexican peso is considered to be the currency trader’s gateway to Latin America. In general, there are too many Latin currencies to trade out there, so the Mexican peso tends to be a proxy for the entire region. The only other currencies against any serious amount of volume is probably the Brazilian real, and that is traded by very few banks, so most firms will simply use the Peso instead.

Oil is about to bounce, and we just filled the gap.

The oil markets look like they're about to bounce, which of course will be good for the petrocurrencies like the Peso, the Canadian dollar, and perhaps the Norwegian krone. That being said though, the Mexican peso does tend to be a little bit more of an alpha play when it comes to petroleum, and as a result the returns can be drastically higher.

It should be noted that this is not a currency pair that new trader should be messing with, but we are had an interesting area where we could run into significant resistance. Alternately, it is very possible that we continue higher, perhaps as high as 13.40 as the larger consolidation area wins out. If we can break the series of shooting stars from a couple of weeks ago, this pair should skyrocket right back to that vicinity.

On the other hand, if we do break down from here, we could see a move back down to roughly 12.50 or so. That is the bottom of this larger consolidation area, and it would be well within the tolerance of the trading that we've seen since May. While many of you will not have traded this market previously, paying attention to the way it moves against the light sweet crude market, certainly can add another trading tool to your arsenal.

USDMXN Daily 102513


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