So, far we have successfully tested the support on the USD/Mexican Peso. The USD is showing strength that it hasn’t in a while.

A key point for the USD to reach is 90.40 which is a previous rally point in early February. If we can close above this level then perhaps the rally in the dollar has further to go. We already moved above that point earlier in the day.

Looking at the USD/Mexican Peso chart you will see that the downtrend line has been broken and that means that the downtrend has been weakened. I don’t expect a runaway move in the USD vs the Mexican Peso but we could move above some previous rallying points as depicted in the chart below. I seriously doubt that the USD will put in a sustained rally, so the strength in the USD vs the Mexican Peso mya be short lived.

The stock market is a whole different story. Correction, what correction.

There remain two scenarios that might unfold. One scenario would have the markets breaking out to new highs followed by a bubble phase that lasts until June or July. The markets would then have put in a market top with a bear market to follow some months later. The second scenario is that the markets are just starting a new bull market after the yearly cycle low that we just experienced. Perhaps, this bull market could last another ten years. So, the bottom-line is not to be distracted by those analysts that are now saying that the rally is over.  Sentiment indicators are still depressed and the markets are acting quite well. There may be volatility going forward to keep people off guard, but nothing indicates a troubled market.

I will keep you informed if my position changes.

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