Mexican Peso Forecast: USD/MXN Drifts Back Above 19.90 as it Holds its Range
USD/MXNFundamental Forecast: Neutral
I once again find myself writing to you about USD/MXN at a price level similar to where I last left off. It’s not that price hasn’t moved in these last 7 days, but it seems to be following a pattern where it converges towards the 19.87 mark towards the end of the week.
USD/MXN Daily chart
Fundamentally not much has changed, the virus continues to ravage through South America and Mexico is reporting new record deaths each day, with the figure reaching a peak of 1,803 on Thursday, and new infections up 22,339 on the day.
There will be some economic data for Mexico released this coming week, including retail sales and GDP, but it is likely the market will see these data points as outdated. Investors continue to look for guidance on the future of the health crisis and the economy, and the actual virus data seems to be the only thing to possibly shed a light on what may come.
Technically, USD/MXN continues to lack the bearish support needed to break below 19.50 and the bullish support to break above the 76.4% Fibonacci (20.18) leaving price action trapped between these levels. The broader risk remains tilted to the downside, but bears are vulnerable to price appreciation in the short-term. Immediate support seems to arise at the 19.60 area whilst short-term resistance can be seen at the 20.00 mark.
Support areas are becoming scarce so a fall below 19.50 could see downside momentum increase rapidly in an attempt to get back to the levels seen last March before the outbreak of the virus. The longer-term objective remains at 19.14, before heading towards the descending trendline it was trailing up until December, which now stands at 16.65.
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
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