Mexico's economy is gradually recovering from the impact of natural disasters, which positively affected the rate of the MXN. After a lasting uptrend and a consolidation phase, the MXN strengthened against the dollar by 4.1%. Economic statistics for the last seven days confirm the recovery of the economy: the manufacturing PMI index amounted to 52.4 points in November; the unemployment rate fell to 3.5%, exceeding investors' expectations. Stable growth in oil prices also supports the MXN.
At the same time, it was pretty hard to resist the U.S. dollar this week. After the Senate approved the Tax reform, the dollar strengthened against most currencies. The dollar rose significantly because investors expect that tax decreases will stimulate the American economy and positively impact the profitability of US state bonds.
At the moment we can see a weak downward trend on the chart. The Stochastic oscillator indicates the rates are in the overbought zone. In the short and long term it is possible to open short deals on the trend, however, it should be noted that on Friday we expect important data about the labor market in the United States, and a week from now investors await the FED decision about the interest rate. There's a high probability that the rate will be increased that will lead to growth of the USD and high volatility. So in the near future there is a probability of the resistance line moving up or even a trend reversal in favor of the dollar. Thus, in medium-term trading the deals to buy can also be effective.
