USD/MXN, USD/ZAR and USD/INR Forecast – Exotic Pairs Continue to Offer Opportunities

USD/MXN Technical Analysis

The US dollar rose a bit against the Mexican peso but has turned around to show signs of weakness as the overall decline in the US dollar continues, especially against high-yielding currencies such as the Mexican peso.

At this point in time, I do believe that we will probably see the Mexican peso start to strengthen again, as the carry trade is a feature of this market, as you do get paid to be short. If we can break down below 17 pesos, then we are looking at somewhere around 16.6. You can see on the chart this pair does tend to grind, and it does tend to move in half peso increments, so keep that in mind.

USD/ZAR Technical Analysis

The US dollar continues to see pressure against the South African rand, despite the fact that we did see a bit of US dollar strength early in the day. The 16-rand level is an area that I think is somewhat important. I don’t know that it is the be-all-end-all of resistance, but it is starting to act like the sellers have come back in. The interest rate differential certainly favors the South African rand and signs of exhaustion, I believe at this point in time, are probably selling opportunities. We could go looking at the 15.2 rand level, maybe even the 14.5, before this move is all said and done.

USD/INR Technical Analysis

The US dollar is rather flat against the Indian rupee, but the Indian rupee has been on its back foot for what seems like a lifetime. I look at this as a market that can be tricky at times, mainly due to the fact that the Reserve Bank of India does get involved in this very often. But you can see that they are doing a controlled demolition of the Indian rupee and have since May.

As long as we continue to see this behavior, I think short-term pullbacks are buying opportunities for the US dollar, with 91.50 being an area of interest, followed by the 50-day EMA, which sits just above the large, round, psychologically significant figure of 90. Longer term, I do think that we will find our way up to the 93 level.