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Mexican Peso Outlook: USD/MXN Election Reversal to Multi-Month Low

Mexican Peso Outlook: USD/MXN Election Reversal to Multi-Month Low

2020-11-05 18:00:00
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 reverses off downtrend resistance – breaks to multi-month lows
  • Key support 20.0752 – Risk for further losses while below monthly open
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The US Dollar is down more than 1.9% against the Mexican Peso this week despite a weekly range of more than 6.5%. The Presidential Election has fueled volatility across the USD Majors with USD/MXN breaking to multi-week highs yesterday before reversing sharply to break to multi-month lows. 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 setup and more.

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Mexican Peso Price Chart – USD/MXN Daily

Mexican Peso Price Chart - USD/MXN Daily - US Dollar vs Mexican 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 that USD/MXN had, “broken below a key pivot zone but the follow-though looks a bit tired here.” The region in focus was the Fibonacci confluence at 21.2316/2942 – price straddled this zone for nearly a month with the post-election rally failing yesterday at longer-term downtrend resistance. The subsequent reversal has broken below the September / October lows and risks further losses heading deeper into November trade- watch the close today for guidance.

Initial daily support rests with the sliding parallel just lower near ~20.5000 – look for inflection there with a break lower keeping the focus on the 2019 swing high at 20.2561 and the 78.6% Fibonacci retracement at 20.0752. Initial resistance now back at 20.8377 with bearish invalidation lowered to the technical confluence / monthly open at 21.2316/2942.

Mexican Peso Price Chart – USD/MXN 120min

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

Notes: A closer look at Peso price action shows USD/MXN trading within the confines of a near-term descending pitchfork formation extending off the June / September highs with the election rally failing just pips ahead of the upper parallel / 61.8% retracement at 21.9920. The subsequent reversal marks a break of the weekly opening-range and keeps the focus lower while below 21.2942.

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Bottom line: A weekly opening-range reversal keeps the risk lower in USD/MXN in the days ahead. From a trading standpoint, the decline is approaching near-term downtrend support- look for topside exhaustion ahead of the weekly / monthly open on recoveries IF price is indeed heading lower. Ultimately a breach above this week’s high would be needed to suggest a more significant low was registered this week. Keep in mind we still have the FOMC interest rate decision and US Non-Farm Payroll (NFP) on tap into the close of the week- stay nimble.

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 - USD/MXN Economic Calendar - Dollar / Peso Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Active Technical Setups

--- 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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