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USD/MXN Achieves Bullish Breakout, USD/ZAR Tests New Highs

USD/MXN Achieves Bullish Breakout, USD/ZAR Tests New Highs

Dimitri Zabelin, Analyst

US Dollar, Mexican Peso, South African Rand, USD/MXN, USD/ZAR – TALKING POINTS

  • USD/MXN could be on verge of bullish spike after key technical levels broke
  • Pennant continuation pattern suggests USD/MXN may rise to around 30.780
  • USD/ZAR tests new highs as US Dollar prevails in virus-shaken environment

US Dollar Outlook vs Mexican Peso

USD/MXN may be on the verge of a bullish spike after clearing the top layer of a narrowing congestive period formed after its 30 percent rise in mid-March. The pair appears to be in the last stages of completing a short-term continuation pattern known as a Pennant. If the break is met with follow-through, the ascent could theoretically be proportional to the one that brought USD/MXN to the digestive interim.

USD/MXN - Daily Chart

Chart showing USD/MXN

USD/MXN chart created using TradingView

This could lead the USD/MXN exchange rate to test as high as 30.8700, and the monthly chart supports the notion of an underlying bullish bias. Looking at a wider timeframe shows that the daily chart is a reflection of a multi-year continuation pattern that strongly resembles a Pennant. In this view, the breakout has already occurred, but a resurgent bullish drive – with accommodating fundamentals – could reinforce the pair’s ascent.

USD/MXN - Monthly Chart

Chart showing USD/MXN

USD/MXN chart created using TradingView

To get more updates on USD/MXN and what fundamental forces are pushing the pair higher, be sure to follow me on Twitter @ZabelinDimitri.

US Dollar Outlook vs South African Rand

USD/ZAR is testing new highs as it flirts with puncturing the lower tier of the 19.0340-19.3453 resistance range. While it may not re-mount the former uptrend (gold channel), breaking above the upper layer with follow-through could reinforce bullish sentiment and push the pair higher. Conversely if it retreats, USD/ZAR may retest support at 17.8289.

USD/ZAR – Daily Chart

Chart showing USD/ZAR

USD/ZAR chart created using TradingView

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--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitriTwitter

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

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