USD/MXN up +0.27% on the day; Trump gambles U.S. food industry future

Currently, USD/MXN is trading at 20.82, up +0.27% on the day or 568-pips, having posted a daily high at 20.89 and low at 20.66.

The American dollar vs. Mexican peso struggled as the diplomatic and trade relationships between both nations are clouded due to the Nafta battle among other political developments. Furthermore, the US government communication hasn't delivered a 'pro-dollar' message, and as a consequence, the greenback has been on the edge during the last 3-consecutive weeks.

Historical data available for traders and investors indicates during January that USD/MXN exotic had the best trading day at +1.83% (Jan.10) or 3983-pips, and the worst at -2.22% (Jan.25) or (4684)-pips.

Trump vs. Mexico continues; U.S. food and farm companies
Reuters reports, "U.S. food producers and shippers are trying to speed up exports to Mexico and line up alternative markets as concerns rise that this lucrative business could be at risk if clashes over trade and immigration between the Trump administration and Mexico City escalate. Diplomatic relations have soured fast this month, as the new U.S. administration floated a 20 percent tax on Mexican imports and a meeting between the presidents of the two countries was canceled. U.S. President Donald Trump has also pledged to renegotiate the North American Free Trade Agreement (NAFTA) trade deal with Mexico and Canada."

Markets - Get ready for a surprise!

The report continues, "Some U.S. producers of corn, soybean meal, and distillers dried grains (DDGs), an ethanol byproduct, are trying to accelerate sales to Mexico because they are uncertain about the risk for new tariffs to disrupt trade, said Rafe Garcia, general manager for U.S. operations at shipper Primos & Cousins USA. The company, which ships U.S. livestock feed to Mexico and imports Mexican products like molasses, has already talked with U.S. producers about selling into other countries, such as Nicaragua, to reduce their dependence on Mexico, Garcia said."

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 20.90 (50-DMA), then at 21.37 (high Jan.27) and above that at 21.70 (horizontal resistance). While supports are aligned at 20.58 (low Dec.30), later at 20.08 (100-DMA) and below that at 19.22 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to head south towards the oversold territory, therefore, there is evidence to expect further Mexican peso gains in the near term.

On the medium-term view, if 22.03 (high Jan.15) is in fact, the top during the first semester in 2017, then traders and investors would have the opportunity to bank some pips as the Mexican peso appreciates towards the following levels: 20.41 (horizontal support), then at 19.87 (short-term 61.8% Fib) and finally below that at 19.19 (short-term 50.0% Fib). On the other hand, if prices where to bounce-off 20.41 figure, then upside barriers are aligned at 21.16 (horizontal resistance), later at 21.58 (high Jan.22) and above that at 22.03 (high Jan.15).

Trump administration sacrifices the dollar on the bullish equity and commodity altar