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Mexican Peso Finds an Important Retracement Zone

Mexican Peso Finds an Important Retracement Zone

Jeremy Wagner, CEWA-M, Head of Education


Talking Points:

-USD/MXN falls towards 200 day simple moving average

-61.8% retracement level is near the 200 SMA

-19.50 is a zone of support

The Mexican Peso has been one of the stronger currencies lately despite the strong words coming from President Donald Trump. This could be in part due to the increased Banxico target rate driving capital flows towards the Peso. Banxico (Mexico’s central Bank) has increased rates to more than twice their record low levels from 2014-2015. The current rate is 6.25%. They have also recently announced an FX hedge program.

USD/MXN has fallen nearly 9% since January 19 (Mexican Peso gained) this year already and sits just above the 200 day simple moving average. Additionally, the 61.8% retracement level comes into play near current pricing levels. The 19.50 zone on the chart is a hot spot of support for USD/MXN.

This confluence of support is likely to hold prices up. Additionally, since USDMXN has been holding above the 200 day simple moving average since 2014, this further proves the trend is still pointed higher. Until this level breaks, we can continue to anticipate further USD strength. However, if this zone fails and breaks, than the pair is at risk of falling back to the US election lows of 18.20

See up to date analysis of USD/MXN in Jeremy’s US Opening Bell webinar on Monday’s.

Wondering what the longer term forecast is for the US Dollar. Find out in our Q1 trading forecast.

Mexican Peso Daily Chart

Created using TradingView

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.