2019-11-11 • Updated
With all this Brexit mess it’s very easy to forget about other currency pairs.
Let’s consider what is going on in the world of the Latin American currencies.
Brazilian real (BRL)
The currency has strengthened on the increased risk-on market sentiment and domestic market enthusiasm surrounding the government strategy over the pension reform. On Friday, the Brazilian president Jair Bolsonaro said that the vote on pension reform cannot take all year as it may hurt the public finances and lead to economic chaos. His attempts to speed up the path of the reform weakened USD/BRL. The next support will lie at 3.7292. If bulls are strong, they will try to push the pair to the resistance at 3.8448 and move it further to the 3.9 level. Alternatively, the pair will fall to the support at 3.7880 and move down to the next support at 3.7292. From the indicators' side, parabolic SAR shows a downward movement for the pair.
Mexican Peso (MXN)
The Mexican currency has been also strengthening on the improved market since March 6. Yesterday, the volatility of the USD/MXN pair increased due to the uncertainties over the construction of the Pemex refinery in Tabasco. Many analysts see the project as poor usage of money. At first, the Deputy Finance Minister Arturo Herrera told about the possible delay of the construction. It helped the pair to test the weekly pivot support at 19.2577. Right after that, the Mexican president reassured the market and commented about his government plans to move ahead on the project. He also stated that the country can pay for both a refinery and investment in Pemex. As a result, bulls tried to take over the market but didn't have enough strength to push USD/MXN above the 19.4366 level (200-day SMA). If the Mexican peso gains more strength, the pair will retest the weekly pivot support at 19.2577. If this level is broken, the next support will lie at 19.1136. Otherwise, USD/MXN will rise above the resistance at 19.4366 to the next resistance at the weekly pivot at 19.6660. Parabolic SAR still shows an upward movement for the pair.
What may affect the currencies this week?
As the Latam currencies are risk-weighted, we need to follow the news which may shake the sentiment in the market and the releases for China.
On Thursday, we anticipate the releases of Chinese fixed asset investment and the level of industrial production. According to analysts, the level of fixed asset investment will reach 6.1%, while the level of industrial production is forecast to fall to 5.5%. Weaker figures will affect the market sentiment and, therefore, pull the emerging market currencies down.
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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