- During Wednesday’s trading session, we saw the US dollar rally slightly against the Mexican peso as interest rates rose again in the early hours.
- We broke above 20.50 only to turn around and show signs of exhaustion.
- So the market is looking a little disrupted at the moment, but it makes some sense given that we’re still in the middle of a transition in the US administration, and at the very top of interest rates, as far as the range is concerned in America.
So the question is do we go back and forth? Or do we see a better chance higher or lower? I think the market is a bit cautious at the moment, which makes a certain amount of sense, with the 20 level below being support and the 21 level above being a bit of resistance.
Sideways between now and Trump
All things being equal, I think we’re going sideways between the current administration and the Trump administration. But when the Trump administration takes over, all bets are off. I think the market is just tentatively counting down the days until the election of Donald Trump in America, because tariffs are most certainly on the table. And quite frankly, I think it would be pretty popular in the US. On the same hand, you also have to understand that if the Mexicans work with the Americans, especially on the border issue, it could provide the relief that the peso needs. However, as things stand now, the bond market is screaming for a stronger US dollar, and so I think we continue to push this area above. Level 21 has been an important resistance multiple times in the past, so it’s no big surprise to see that we’ve struggled to break above. But if and when we do, it could become a huge buy and hold signal.
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