- USD/MXN prints mild losses to consolidate the biggest daily jump in three weeks.
- Failure to cross 100-SMA appears less lucrative for Mexican Peso buyers unless slipping below previous resistance line from early April.
- 200-SMA, seven-week-long ascending trend line are the key levels to follow clear directions.
USD/MXN drops to 18.05 as it pares the longest daily run-up in three weeks amid Wednesday’s sluggish morning. In doing so, the Mexican Peso (MXN) pair retreats from a one-week high after snapping a four-day downtrend the previous day.
That said, the 100-SMA hurdle of around 18.10 by the press time guards the immediate recovery of the USD/MXN pair.
However, the pair buyers remain hopeful amid the upbeat RSI (14) line unless the quote defies Tuesday’s break of a three-week-old resistance line, now immediate support near 18.00.
Even if the USD/MXN sellers manage to conquer the 18.00 resistance-turned-support, an upward-sloping support line from early March, close to 17.94 at the latest, becomes crucial for them to break.
Meanwhile, an upside break of the 100-SMA hurdle of 18.10 isn’t an open invitation to the USD/MXN bulls as the 200-SMA level of 18.30 and the monthly high surrounding 18.40 can challenge the USD/MXN bulls afterward.
In a case where the Mexican Peso bears keep the reins past 18.40, the late March swing high of around 18.80 and the 19.00 round figure could lure the traders.
USD/MXN: Four-hour chart
Trend: Limited downside expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Read More
The Mexican peso is on the defensive once again after yesterday’s session saw the USD/MXN pairing claw back some losses. The pair is currently trading at around 17.90 after yesterday’s brief retreat from the key 100-day simple moving average (SMA) of 18.00.
The USD/MXN pair has been in a sustained bearish trend over recent weeks, weighed down by worries over the rising number of coronavirus cases in Mexico and an overall global economic slowdown. Last week saw the peso extend its losses to the 100-day SMA, with the pair hitting an intraday high of 18.02.
However, this was followed by sharp selling pressure which saw the USD/MXN pair close out at 17.76. Yesterday’s session saw buyers come back into the market, with price climbing back above the 18.00 mark as investors appeared to take advantage of the short-term pullback.
Despite the recent recovery, analysts remain bearish on the Mexican peso, citing a continued bearish trend with no significant economic data from Mexico scheduled for release until the end of the week.
In addition, global economic data has continued to disappoint and the US dollar has remained broadly supported recently amid an overall risk-off sentiment. This could continue to weigh on the USD/MXN pair in the near-term, with the key 100-day SMA still in focus at 18.00.
Moreover, with long-term factors still favoring a bearish trend for the Mexican peso, analysts are predicting that prices could remain under pressure as long as broader market sentiment remains weak and risk aversion persists.
In conclusion, the USD/MXN pair is currently trading at around 17.90 and appears to have found support near the 100-day SMA at 18.00. Despite the recent recovery, analysts remain bearish on the Mexican peso and expect the pair to remain under pressure in the near-term. As such, traders should be aware of the downside risks and any further dip below the 18.00 mark could trigger further declines.
