USD/MXN Analysis: Return of Highs as Anxiety Escalates about Outlook – 13 January 2025

-- The USD/MXN is trading a trace below the 20.80000 level as the currency pair has returned to its upper levels.
-- Friday’s buying of the USD/MXN and early this morning’s results shows a clear challenge to values traversed since the first week of November 2024.
-- Nervousness in global financial institutions has become rather anxiety packed, and retail traders should be careful about betting against the upwards movement in the near-term.

Yes, important technical resistance levels are clearly in evidence when a three month chart is glanced, but there are no guarantees this time around that the USD/MXN will not produce another spike upwards. Friday’s jobs numbers from the U.S were stronger than expected and this has cemented the notion among traders the Federal Reserve is going to remain cautious about interest rate policy over the mid-term.

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Resistance Levels and USD/MXN Wagers

Technical traders who have bias and believe the Mexican Peso is clearly overbought should reconsider their outlooks and not be so eager to bet against the higher price range being demonstrated for the moment. A combination of factors are weighing into USD centric momentum that are causing the apex values, and betting against U.S and Mexico politically loud dialogue, Fed concerns, Trump’s taking power in one week could prove speculatively dangerous.

The U.S will also issue important inflation data tomorrow and on Wednesday via the PPI and CPI statistics. But even if these numbers were to come in weaker than anticipated traders may not want to bet on this causing a sudden reversal lower. Yes, before the holiday season got underway the 20.00000 ratio looked like a support level worth wagering on for short-term considerations, but now support around the 20.70000 – 20.63000 levels must be broken first, followed by selling which produces lows near 20.50000 again. Global nervousness in Forex may keep the USD/MXN higher than many believe the currency should be valued.

Near-Term USD/MXN Considerations

Not only are financial institutions nervous about the overall strength of the USD, but they also are fully aware President-elect Trump will take office in one week. There has been back and forth rhetoric from the Mexican President and Trump the past handful of days, this will not be looked upon as constructive positively for the Mexican Peso in the near-term by financial institutions.

-- Wagering on lower trends to emerge suddenly in the USD/MXN may feel tempting, but speculators should be careful about betting against the nervous trend short-term.
-- Careful risk taking tools should be used and volatility in the USD/MXN over the next few days will likely be seen.
USD/MXN Short Term Outlook:

-- Current Resistance: 20.79200
-- Current Support: 20.78400
-- High Target: 20.82900
-- Low Target: 20.72500 ;
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