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Dollar vs Mexican Peso Outlook: USD/MXN Rally Eyes Trend Resistance

Dollar vs Mexican Peso Outlook: USD/MXN Rally Eyes Trend Resistance

2020-09-21 18:30:00
Michael Boutros, Strategist
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Mexican Peso Technical Price Outlook: USD/MXN Near-term Trade Levels

  • Mexican Peso updated technical trade levels – Daily & Intraday Charts
  • USD/MXN recovery underway within broader downtrend- key resistance into monthly open
  • Risk for topside exhaustion sub-21.8779 – key near-term support 21.2316

The US Dollar has rallied more than 3.5% against the Mexican Peso since last week’s low with the advance taking USD/MXN back above a confluence pivot zone we’ve been tracking for months now. While further strength may be on the cards in the days ahead, price is approaching major downtrend resistance just higher and we’re looking for a reaction there for guidance IF reached. These are the updated targets and invalidation levels that matter on the USD/MXN technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Peso technical setup and more.

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Mexican Peso Price Chart – USD/MXN Daily

Mexican Peso Price Chart - USD/MXN Daily - US Dollar vs Peso Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/MXN on Tradingview

Technical Outlook: In my last Mexican Peso Price Outlook we noted to be on the lookout, “for topside exhaustion ahead of 22.1643 IF price is indeed heading lower with a close below 21.2316 needed to fuel the next leg in this trend.” Price registered a high at 21.9419 before turning sharply lower with the decline breaking below support last week – a late-week recovery has now fueled a rally back above this threshold and risks a larger USD/MXN price rally in the days ahead.

The advance is testing trendlineresistance extending off the yearly highs with the 38.2% retracement of the late-June decline just higher at 21.7560. Ultimately, a breach / close above the monthly open / opening-range high at 21.8779/9242 would be needed to validate a larger price reversal with such a scenario exposing confluence resistance at the 61.8% retracement at 22.3233. Downside support objectives are unchanged at the 1.618% extension at 20.6789 and 20.0752.

Mexican Peso Price Chart – USD/MXN 120min

Mexican Peso Price Chart - USD/MXN 120min - Dollar vs Peso Trade Outlook - Technical Forecast

Notes: A closer look at Peso price action shows USD/MXN trading within the confines of an descending pitchfork formation extending off the July / August highs with today’s advance faltering just ahead of the 61.8% parallel. Initial support now rests back at 21.2316 with a break / close below weekly open support at 21.0827 needed to mark resumption of the broader downtrend.

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Bottom line:USD/MXN has rallied back above confluence support but keep price within the confines of the near-term downtrend. From a trading standpoint, look for a reaction on a test of the upper parallels / 21.7560 for guidance with breach / close above the September range highs needed to suggest a larger reversal is underway.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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Key US / Mexico Data Releases

Key US / Mexico Data Releases

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--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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