The rates of the USD/MXN pair continue in the frames of the downtrend which has lasted for more than six months, when the Mexican peso fell as a result of the presidential elections in the USA and D. Trump's anti-immigration protectionist policies openly directed against Mexico. Despite several factors against the Mexican peso, such as perspectives for lowering oil prices and the worsened relations between the U.S. and Mexico, the peso managed to recover its lost positions.
This week the MXN reached the level from April 2016 amid the rising oil prices and the failure of the health care reform in the United States. This points to the inefficiency and weakness of Donald Trump's administration. The failure of the health care reform threatens the further policies of Donald Trump and decreases his popularity in the United States. The US dollar was also negatively impacted by the cautious rhetoric of Yellen about a further tightening the FED policy. Also, amid disappointing data about inflation and retail sales, investors began to doubt whether we would see a further increasing of the interest rate this year.
Regarding Mexico, there is no recent data about the economy of this country, but the situation in the US and the prices on the oil market have impacted the value of the Mexican peso. In the near future, the price of oil will change depending on the news about the OPEC summit and its outcome. The summit will take place on July 24. Any crucial decisions at the summit are not expected, but investors are closely watching the results of the summit. There will be a discussion on the efficiency and the execution of the OPEC agreement on the reduction of oil extraction and perspectives for Libya to join the Agreement. Representatives of Libya will also attend the summit.
The MACD and Stochastics oscillators indicate a high probability of a price correction and a good moment for opening deals against the trend, but in medium-term trading it is better to choose the deals to SELL, given the lack of signs for a completion of the downtrend, and the MXN's ability to strengthen more against the USD.
