Quick FX Observation
MXN is oversold
USDMXN is at an extreme overbought level, with pure panic unwinds in all carry trades over the last 10 days.
It is well over 2 sigma overbought on my RSI measure. Last times we were here was 2020 and Trade Wars.
Over 1 sigma elevated relative to 6MMA
Pretty big spike in 1m vols, which have doubled.
Making the vol surface deeply inverted.
This is impossible to trade in a personal account, but if you are an institutional trader there are great ways to fade this.
Do a 1m/3m Put Calendar. This plays for a contained reversal of the move as it is unlikely we unwind this fully very quickly, and also benefits if 1m vols calm down.
3m Put w/1M Knock-Out. This has a similar dynamic as #1 but in limited loss format if we do reverse the entire move.
EURMXN may be a similar pair with even more volatility noise embedded due to the French elections.