The USDMXN is one of my favorite currency pairs because of its technical behavior. Traders with a reasonable eye for support, resistance, trendlines, and price action will see its patterns and predictability.
Furthermore, what makes the USDMXN more appealing is the fact that it offers a significant yield opportunity against the USD. Current rates favor MXN (4.25%) vs. USD (.25-.50%). Holding a USDMXN SELL will offer positive rollover or positive interest, but obviously you want the trade to move in the proper direction as well. Considered an exotic pair, the USDMXN is not a trade that you want to fight. So look for the structural alignments and clean setups, and it becomes very tradable. I would love to see a topping formation on the USDMXN for a massive carry trade opportunity (See Figure 3). It definitely requires some confirmation and a bearish breakdown on the U.S. Dollar Index (DXY), but if we see the alignments, the profit potential is amazing.
Before deciding to participate in the financial markets, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection, and market volatility that may substantially affect the price, or liquidity of a currency pair or financial instrument. Moreover, the leveraged nature of trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. Trading financial markets on margin carries a high level of risk and may not be suitable for all investors. Past performance is not indicative of future results. Any statements regarding income, whether expressed or implied, do not represent a guarantee. Any opinions, news, research, analysis, prices, or other information provided is deemed general market commentary and for educational purposes only, and does not constitute investment advice or solicitation to buy or sell any contracts or securities or any type.
Editors’ Picks
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
USD/JPY climbs relentlessly ahead of BoJ meeting
The USD/JPY extends its uptrend despite verbal intervention from the Minister of Finance. The wide differential between US and Japanese interest rates is seen as a major factor contributing to the rise. The idea that a lot is already priced into the US Dollar could limit USD/JPY upside.
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.
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