USD/MXN: Carry on until risks rise - Rabobank

Christian Lawrence, Senior Market Strategist at Rabobank, suggests that they have continued to highlight the rise in MXN’s carry attractiveness as rates increase and volatility falls, particularly in a relative sense compared to the rest of the LatAm region.

Key Quotes

“We think USD/MXN will remain under pressure until we have further clarity on Trump’s tax and trade plans.”

“At that point we could see a break higher with our call for a move back above 20.”

“A look at the USD/MXN daily chart in figure 7 shows that consolidation and indecision continues to rule the roost when it comes to price action. The pair continues to bump along support at 18.6160. That said, price action is ripe for a break out with narrowing daily ranges and it could be argued that on Friday 7th April we saw bullish divergence form between price action and the relative strength index although it has to be said that the signal is fairly weak.”  

“In summary, we expect USD/MXN to continue trading around this area in the very short term but we still favor a break higher in the pair further out.”