While Mexico is not a member of OPEC, the oil cartel has been making it known that it is considering a reduction in production.
The USD/MXN has continued a near term downward trend and is within an important psychological price range as technical and fundamental considerations collide.
As of this writing the USD/MXN is trading below the 20.00000 slightly, and its downward momentum has found a polite trend over the near term. On the 28th of September the USD/MXN touched the 20.58000 vicinity as news was dominated by the U.S Federal Reserve outlook. However, during this same time, as the USD/MXN climbed to highs not seen since early August, news regarding hurricane Ian started to affect behavioral sentiment too creating a reason for a bearish turn in the Forex pair.
There is an Additional Reason for USD/MXN Bearish Trend
It is nice to congratulate our belief that downward pressure ensued for the USD/MXN, based on fears of devastation in the Gulf of Mexico and problems with energy production and logistics, but this is not the only reason for the bearish trajectory. While Mexico is not a member of OPEC, the oil cartel has been making it known that it is considering a reduction in production. This open whispering by OPEC has helped send the price of Crude Oil up to almost 84.00 USD per barrel as of this morning. This helps Mexico regarding the value of its own Crude Oil exports.
The combination of these factors has certainly helped the bearish trend of the USD/MXN develop. Now that the USD/MXN is trading below the 20.00000 mark, traders have new considerations. The USD/MXN has traded lower in the recent past. On the 22nd of September the USD/MXN was near the 19.85000 ratio and on the 12th of September the currency pair was around 19.75000.
Technical Support and Crude Oil News via OPEC will be Factors Near-Term
If the USD/MXN in the short term sustains its value below the 20.00000, this may be a signal that sentiment believes another leg lower can develop. The 19.95500 mark should be monitored and if this rather close support level is flirted with and the price of Crude Oil remains within it current price range, the USD/MXN could have further room to explore lower.
Traders should monitor news regarding Crude Oil production from OPEC and the official announcement will create volatility.If key support near 19.95000 is challenged and proven vulnerable, new short term lows could be demonstrated which test lower values seen on the 22nd of September near 19.90000.
The USD/MXN has delivered a full range the past month of trading. However, technically even though the U.S Federal Reserve has been hawkish and remains vocal about raising interest rates, the currency pair has often traded lower than its current value.
Speculative wagers on further downside price action may prove to be a worthwhile short term consideration. Risk tactics should consider plenty of U.S economic data will be delivered near term, including the employment and earnings statistics this Friday. Because of the ‘numbers’ shadow from the U.S choppy conditions will remain prevalent for the USD/MXN. A one way path for the USD/MXN will not be produced easily for speculators.
USD/MXN Short Term Outlook:
Current Resistance: 20.03200
Current Support: 19.95600
High Target: 20.11300
Low Target: 19.87000