Mexican Peso bouncing back today but I am totally lost on carry trades

[VantagePoint7]

Hey everyone, ngl I am super confused by what is happening with forex right now. I saw the news that the Mexican Peso actually recovered like half a percent against the dollar today, which sounds pretty decent, but then it still finished the week down around three percent because of this whole carry trade exodus thing.

Not gonna lie, I keep seeing people talk about carry trades and interest rate differentials, but my brain just melts trying to figure out how it actually impacts my charts. Like, if the rate gap between the US and Mexico is at its lowest since 2015, does that mean big institutional money is just permanently pulling out of MXN pairs, or is this little bounce today a sign that a reversal could happen? I am just a beginner trying to wrap my head around macro stuff instead of just staring at moving averages all day.

How are you guys trading this right now? Are you staying far away from the peso, or is anyone actually trying to buy this dip?

 

[Owen Carter 27]

Honestly, ignore the "carry" noise for a second. If you just look at the daily chart, the MXN is just slamming into a clean support level that held back in June. Whether the carry trade works or not doesn't matter if you're just trading the reaction off that level. I'm waiting to see if we get a nice engulfing candle or a pin bar on the H4 before I even think about touching it. Keep it simple, man. The charts tell you more than the macro headlines ever will.