Euro (EUR) is the official currency of the Eurozone and most EU countries. Its exchange rate is directly related to news releases of the banking sector and the decisions of the European Central Bank on the interest rate. Significant news feeds are published from 6 weeks to 8 times a year.
The impressive time intervals between media dumps determine the relative stability of the currency and its liquidity. The euro is often chosen for trading cross rates when the dollar looks weak or there are concerns about its quotes soon.
The Mexican Peso (MXN) ranks eighth in the world in terms of liquidity, significantly inferior to the US Dollar (USD), Euro (EUR), Japanese Yen (JPY) and British Pound (GBP).
Forex traders trade pesos through currency pairs that set real-time comparative value. One of the most interesting in this segment is EUR/MXN.
Over the past decades, the peso has moved from an inactive currency of the developing world to the status of an international financial instrument. Such a breakthrough happened due to the fact that many modern traders drew attention to the emerging markets of Latin America, where MXN is the most liquid and valuable asset.
The currency pair is trading continuously from Sunday evening to Friday evening in the United States, offering significant profit opportunities.
However, the volume and volatility can fluctuate strongly in each 24-hour cycle, and the spreads expand during quiet periods and narrow during active.
Although the ability to open and close positions at any time is a key advantage of Forex, most trading strategies unfold during active periods.
As the world’s ninth-largest oil producer, Mexico is tied to its natural resources, with the peso showing a close correlation with other commodity currencies, including the Brazilian real (BRL) and Colombian peso (COP).
The US weekly oil reserves report published at 10:30 a.m. EST Wednesday could have a particularly strong effect on EUR/MXN.
However, traders should not rely solely on data about commodity markets. Banco de Mexico meets eight times a year to discuss monetary policy and announce policy updates through press releases.
Most meetings are scheduled 24-72 hours after the US Federal Reserve issues its decisions, emphasizing the interdependence between the two countries. Forex traders need to be on the lookout during business hours because policy updates can happen at any time.
Most of Mexico’s economic data is published at 9:00 AM or 10:30 AM EST. The period 30 to 60 minutes before these releases and one to three hours after that is an extremely popular period for trading EUR/MXN, since it also crosses the beginning of a trading day in the USA, attracting a large number of traders from all over the world.
Similar data for the EU is released at the same time, but for the time zone of the Eurozone. In the USA, it is a night at this time, so the second trading wave occurs between 8 pm and 4 am GMT.
Trading on EUR/MXN means a fast, highly profitable transaction with relatively low-risk indicators. However, beginners should not immediately choose this instrument.
The Latin American market is still poorly understood. You need to get experience and skills with it before you can seriously think about trading EUR/MXN.