Top Story

USD/MXN Hoping for Trade Deal to Go Through

As the pending impeachment of President Trump in the House of Representatives appears to be coming sooner than later,  many are left wondering if the United States-Mexico-Canada Agreement (USMCA) will be ratified.  House Democrats have not yet brought it to the floor for a vote, though Mexico and Canada have both already agreed to it.  There are concerns about enforcement of the agreement.  However, with the strength of the Mexican Peso vs the US Dollar over the last few weeks, it appears the market believes it will be approved.

USD/MXN has been trading in a symmetrical triangle since April of 2018.  On Friday the pair closed below the rising tending for the first time and yesterday bounced to retest it.  Today the pair is consolidating just below the trendline.  The trendline and current price (19.1240) are just below the 127.2% Fibonacci extension from the low on September 18th to the high on October 2nd .  First resistance comes in between 19.14 and 19.18. 

Source: Tradingview, FOREX.COM

On a 240-minute chart, one can see that horizontal resistance comes across at the September 2nd lows and the 50% Fibonacci retracement level of the move from the high on October 10th to yesterday’s lows at 19.3200/19.3300.  First support comes in at yesterday’s lows just above 19.000 at 19.0222.  Below there is a band of support from a series of prior lows back in June and July down to 18.8500.

Source: Tradingview, FOREX.COM

The question now becomes one of “buy the rumor, sell the fact?” if the USMCA does get ratified.  Bears need to ask themselves how much of this has already been priced into the market.  If USD/MXN breaks below 18.8500, the pair can move quickly to the downside. 

Watch for headlines over the next few days regarding USMCA, as Brexit and the US-China trade war continue to dominate the focus of the market. (Oh…. and there is also BOC, FOMC, BOJ, and NFP headlines to pay attention to as well!!)


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account