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.
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Editors’ Picks
AUD/USD stays directed toward 0.6500 as RBA's Bullock speaks
AUD/USD is extending losses toward 0.6500 in Asian trading on Tuesday. The Aussie Dollar remains offered after the Reserve Bank of Australia extended the pause. Markets digest the less hawkish policy statement while Governor Bullock's press conference gets underway.
USD/JPY holds gains below 150.00 on the expected BoJ rate hike
USD/JPY holds gains below 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework.
Gold price flat-lines above one-week low, awaits the crucial Fed decision on Wednesday
Gold price oscillates in a range and is influenced by a combination of diverging forces. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside. Geopolitical risks lend some support to the XAU/USD ahead of the key FOMC meeting.
Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400
Bitcoin price downside momentum continues to gain strength, giving sidelined and late bulls a chance to buy the dip. The market remains focussed on the oncoming halving, expected to kick off the next bull cycle. For the meantime, however, spot BTC ETFs remain the main play in the market.
Lots of tension ahead of this week's Fed decision
Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.
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