The USD/MXN has seen political threats cause a burst of nervousness in the USD/MXN which have caused a strong bullish surge to emerge.

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• The USD/MXN is trading near the 18.36455 ratio as lightning fast price velocity remains a danger in the currency pair for day traders.
• The USD/MXN has seen a bullish surge higher as financial institutions have become nervous due to the election results in Mexico.
• While the new President Claudia Sheinbaum has clearly won, she will not take power until the 1st of October.

Unfortunately, it appears the outgoing President Andres Manuel Lopez Obrador has a goal of pushing through drastic changes to the constitution regarding the judicial branch before he leaves office. Talk of a reform to the judicial branch and other changes to the constitution have sent shockwaves into financial markets focused on Mexico, because the ruling party has enough political mandates to push through changes to the laws without the capability of much political opposition.

Politics and Volatility Cause Day Trading Pain in USD/MXN

While Claudia Sheinbaum has said she believes Obrador should move slowly, the outgoing President insists he has the backing of the Mexican citizens because of the recent voting success for his political party, Morena. The USD/MXN was trading near a low around the 17.44150 mark on Thursday, but things got dangerously bullish afterwards. It needs to also be acknowledged the USD/MEX was trading around the 16.52000 vicinity on the 21st of May.

Traders can plainly see via technical charts the USD/MXN was near the 17.00000 mark on Thursday the 30th of May and into Monday the 3rd of June, but after the election results were digested and nervousness was ignited the currency pair was touching a high of nearly 17.74000 later that day. Volatility has gripped the USD/MXN since the election results as the outgoing Mexican President has insisted on rattling the cage, even suggesting he will offer ‘advice and dissent’ to the incoming President after she takes the helm.

USD/MXN Support Levels and Technical Perspectives

Choppy conditions will continue in the USD/MXN in the short and near-term. While it is a natural inclination to think fear has been too strong and caused too much of a rise in the currency pair, day traders’ need to be cautious as financial institutions react quickly. Also the coming inflation data from the U.S this Wednesday and then the Federal Reserve’s FOMC rhetoric will shake the Forex including the USD/MXN.

• While the USD/MXN may look overbought and be a potential selling opportunity if emotions calm down, betting on when this will happen is speculative.
• The rapid changes in value in the USD/MXN which have been seen the past few days may continue as financial institutions look for equilibrium.

USD/MXN Short Term Outlook:

• Current Resistance: 18.36990
• Current Support: 18.31100
• High Target: 18.42300
• Low Target: 18.21100

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