US Dollar vs Mexican Peso Outlook: USD/MXN Remains Brittle After Sharp Sell-Off
US Dollar vs. Mexican Peso (USD/MXN) Price, Analysis and Chart:
- The steep USD/MXN sell-off finds support but will it hold?
- USD/MXN may consolidate as pair remain oversold.
USD/MXN – Target Made, Time to Consolidate and Re-Think
The sell-off in USD/MXN continues and touched a near three-month low on Tuesday as the Mexican Peso continued to gain ground. Last week’s USD/MXN report identified the 50% Fibonacci retracement level at 22.153 as the next level of support and this level traded yesterday, just, before a very minor rebound.
The one-way price action for USD/MXN may now look to consolidate, despite another lower high being printed today. So far today’s daily candle has failed to make a lower low for the first time in two weeks, excluding Sunday’s candles, and this coupled with support from the 50% Fib retracement at 22.153 may see the pair pause before the next move. The CCI indicator remains in oversold territory and suggests a level of short-term support as positioning looks to balance out.
The strength of the sell-off may mean that any upside move will be capped and it is difficult looking at the chart to suggest that the pair will break back above 23.00/23.009 – big figure and 38.2% Fib retracement - in the short-term. If USD/MXN trades below yesterday’s multi-week low at 22.10, then the series of lower lows will remain in place, leaving three prior lows around 21.350 and the 61.8% Fibonacci retracement level at 21.296 as the next levels of support.
Data to watch out for include today’s Mexican unemployment report (12:00 GMT) and the Fed Beige Book (19:00 GMT), Thursday’s US Q2 GDP 2nd estimate (13:30 GMT) and Mexico’s MPC minutes (16:00 GMT) and Friday’s US core PCE (13:30 GMT) and Michigan consumer sentiment (15:00 GMT).
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USD/MXN Daily Price Chart (November 2019 – May 27, 2020)
What is your view on USD/MXN – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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