Free Trial

EURMXN Narrowing In On 2022 Lows, Goldman Sachs Tighten Stop On Short

MXN
  • Despite the impressive bounce for EURMXN in late 2022, the pair has completed a near-10% reversal lower, narrowing the gap with last year’s lows at 19.1483. A breach of this level would place the pair at the lowest level since 2016 and could closely correspond with USDMXN at the 18.00 mark and the 2018 lows at 17.94.
  • MXN resilience has been a constant theme, underpinned by a hawkish central bank and relative optimism in EMFX, despite the rebounding greenback in recent weeks.
  • Goldman Sachs noted that their analysis of historical Dollar peaks suggests that, while the USD may have peaked in 2022, its path towards further weakness may be bumpy and so it remains important for EM FX investors to find EM longs that can weather periods of Dollar resurgence and also provide a carry buffer.
  • In that context, Goldman Sachs think their preferred EM carry basket long (MXN, BRL & HUF vs EUR) can remain resilient, but they have also tightened stops this week, in part to lock in gains, but also to protect against the possibility of that the Dollar move could be more indiscriminate in coming sessions.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.