Sign In with Google
Sign In with Facebook
The Story Behind the USDMXN Currency Pair
The trade connection between the United States dollar (USD) and the Mexican Peso (MXN) is a prominent feature in global finance markets. Due to the extreme fluctuations of the Mexican Peso, betting on the USDMXN currency pair associated with high risks. In recent times, the USDMXN exchange rate has shown a diminishing trend, primarily owing to factors such as the dominant US dollar, the frailty of the Mexican financial system, and the enduring economic conflict between the US and China.
Evolution of the USDMXN Currency Pair
The USDMXN currency trade connection has been in existence for numerous centuries, but it gained significant importance in the global trading scene after the inception of the North American Free Trade Agreement (NAFTA) in the early 1990s. NAFTA facilitated a free-trade area between the US, Mexico, and Canada, thus augmenting trade and investment, increasing the necessity for the Mexican Peso and consequently the USDMXN pair.
As the 2000s dawned, the USDMXN exchange rate began its appreciation, hitting around 11.40 pesos per dollar in 2008. Nevertheless, the past few years have seen the rate on a downward spiral, descending to a low of about 20 pesos per dollar in 2023.
Current Status and Future Predictions of the USDMXN Pair
The current situation of the USDMXN currency pair is not definite. It is expected that the power of the US dollar could continue in the short-term, possibly adding further stress on the Mexican Peso. Meanwhile, improvement in the Mexican financial system could assist in steadying the exchange rate in the coming years.
Predicting the long-term destiny of the USDMXN currency pair is challenging. The exchange rate will be guided by the respective future strength of the US dollar and the Mexican economy.
USDMXN Trading Techniques and Suggestions
Trading the USDMXN currency pair leads to a plethora of strategies. Where some traders trust technical analysis, some rely on fundamental analysis. While technical analysis examines past price graphs to detect patterns and developments, fundamental analysis reviews economic data and other relevant factors that can influence a currency’s value.
The key thing to remember when trading the USDMXN pair is to be aware of the risk involved due to its volatile nature. Therefore, implementing stop losses to manage losses can be an effective strategy.
Views from the Experts
Various experts have expressed differing outlooks on the USDMXN currency pair's future. Here are some views from leading figures in the finance industry:
Kathleen Brooks, City Index's Research Head, envisages that "The USDMXN is expected to remain under stress in the short-term due to the solid US dollar and the struggling Mexican financial situation."
Neil Wilson, Chief Market Analyst, finds "The USDMXN pair to be risky, yet it could yield opportunities for daring traders."
Joerg Mahn, Commerzbank’s FX Strategy Head, anticipates "The USDMXN exchange rate will probably experience fluctuations in the upcoming months, but we believe it will eventually stabilize."
In Conclusion
The USDMXN currency pair is a complex, high-risk market. So, it's important to do thorough research before making a move. For risk-takers, though, this market offers potential profitability opportunities.
