#USDMXN Forecast: #US #Dollar Continues to Fight Against the #Mexican Peso (9 May 2024)

• The US dollar has rallied a bit against the Mexican peso during the early hours on Wednesday, as we continue to see a lot of volatility overall.
• Keep in mind that the interest rate differential actually favors Mexico in this equation, and that's part of why we had seen such a strong downtrend for so long.

That being said, we are in between the 50-day EMA and the 200-day EMA indicators, and that, of course, is an area you normally see a lot of volatility in. This is mainly due to a lot of technical traders placing trades in one direction or the other. More importantly, we're around the 17 pesos level, which has a certain amount of psychology attached to it, and then you also have to keep in mind that there's probably options barriers in that neighborhood as well.

Risk Appetite Continues to Matter

Because of this, I think we'll have to pay close attention to how things play out because there is a risk appetite component in the USD/MXN pair. Keep in mind, people generally run to the US dollar in times of trouble and away from emerging market currencies regardless of the interest rate that you get paid. Beyond that, Mexico is highly levered to the US economy as it is now the number one exporter to the United States.

And obviously there's a major influence on Mexican corporations and factories, et cetera, depending on what's coming out of the U.S. With all of that being said, it does look like there is a large amount of clustering above that could cause some issues. And therefore, I think it's going to be difficult to rally from here significantly. However, if we were to rally above 17.30 pesos then you have to think that perhaps the trend change is in the cards. It could be a difficult move, but it's worth noting that if we do rally at this point in time, it could lead to not only the Mexican peso struggling, but also quite a few emerging markets as well.

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#GBPCHF Forecast: British #Pound Plunges Against #Swiss #Franc (3 May 2024)

• At this point, the market is likely to continue to look at the 1.15 level as a major ceiling, and the fact that we have fallen so hard will certainly scare some traders away.
• However, it’s also worth noting that we continue to knock on the door of the ceiling, and of course the interest rate differential favors the British pound, and therefore I think given enough time we eventually do break out.

Swiss National Bank

Keep in mind that the Swiss National Bank has no interest in seeing a strong Swiss franc at the moment, so you won’t have some of the noise and concerns that you have dealing with the Japanese yen at the moment. After all, the Japanese have intervened a few times, although they will end up losing. In this particular pair, the Swiss really don’t have any issue with the depreciation of their currency at this point, because it has been so strong for so long. In that sense, you do have a bit of a tailwind in this pair that you don’t have in some others.

All things being equal, I do believe that we have a situation where sooner or later the buyers come back in and take advantage of the interest rate differential, as it does pay so well at the end of each session. Remember, institutional traders pay close attention to this, and given enough time I do think that it is a main driver here. At this point, I think there is plenty of support all the way down to the 1.13 level, with the 50-Day EMA city just above there. In general, this is a pair that I’m looking for value to take advantage of.

That being said, if we were to simply turn around and rip through the upside, I think at that point you also have to consider getting long in GBP/CHF pair because at that point in time it would be very likely to see this pair reaching toward the 1.20 level over the longer term. Obviously, that would be something that would take some time to accomplish.

CZC

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TP1 : 1.3727
TP2 : 1.3757
TP3 : 1.3907
SL : 1.3607

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TP1 : 0.5896
TP2 : 0.5926
TP3 : 0.6076
SL : 0.5776

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Forecast with Elliott Wave Technique Calling #EURUSD to Extend Lower (19 April 2024)

Short term Elliott Wave view in EURUSD suggests that cycle from 12.28.2023 high is in progress as a zigzag Elliott Wave structure. Down from 12.28.2023 high, wave A ended at 1.0694 and rally in wave B ended at 1.098. Wave C lower is in progress as a 5 waves impulse Elliott Wave structure. Down from wave B, wave ((i)) ended at 1.072 and rally in wave ((ii)) ended at 1.0885. Pair extends lower in wave ((iii)) with internal subdivision as another 5 waves in lesser degree. Down from wave ((ii)), wave (i) ended at 1.0846 and wave (ii) ended at 1.0866.

Wave (iii) lower ended at 1.071 and rally in wave (iv) ended at 1.0756. Final wave (v) lower ended at 1.06 which completed wave ((iii)). Wave ((iv)) rally is unfolding as an expanded Flat structure. Up from wave ((iii)), wave (a) ended at 1.065 and dips in wave (b) ended at 1.06. Wave (c) higher ended at 1.069 which completed wave ((iv)). Pair then extends lower again in wave ((v)). While below 1.069, expect pair to extend lower in wave ((v)) to complete wave C of (2) before pair turns higher.

EURUSD 60 Minutes Elliott Wave Chart

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#CHFJPY Forecast: Swiss Franc Continues to Consolidate Against Yen (2 April 2024)

CHF/JPY consolidates; ¥167 support key. Interest rate dynamics between SNB and BoJ shape pair's trend. Break above ¥169 may signal uptrend, influencing JPY pairs.

• The Swiss franc has been back and forth during the trading session on Monday, as this market is going to continue to see a lot of noisy behavior.
• The ¥167 level underneath has been offered support a couple of times, and therefore I think it’s possible that we would see a situation where we have a lot of noise in this area.

A Battle Between Funding Currencies

The Swiss franc initially did try to rally against the Japanese yen, but as it pulled back it looks like we are just simply settling into some type of short-term range. This is a pair that I watch quite often, due to the fact that one of the facts of life when trading currencies is that you are trying to move with interest rates. The Swiss franc and the Japanese yen are two of the world’s favorite funding currencies, and even though the Bank of Japan recently increased interest rates to a whopping 0.1%, the reality is that the Swiss National Bank has recently cut rates. That’s part of why we are seeing a downtrend in the short-term, but in the longer term we still see an interest rate differential that pays you to own this pair at the end of the day. Granted, it’s not a lot but it’s enough to continue to favor shorting the Japanese yen.

Ultimately, this is a situation where if we can break above the 50-Day EMA above, which is closer to the ¥169 level, then we could see quite a bit of upward momentum. In that environment, I would anticipate that the Japanese yen would get eviscerated against most currencies, not just this one. After all, this will be the “weakest currency” to match up against the Japanese yen, so this will give you a good idea as to how many people will be jumping into short the yen, and start buying other currencies in pairs like the GBP/JPY, NZD/JPY, and AUD/JPY currency markets. In other words, this chart is a bit of a harbinger for what happens with the JPY overall.

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