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Mexican Peso Latest: USD/MXN Struggles due to US Dollar Indecision

Mexican Peso Latest: USD/MXN Struggles due to US Dollar Indecision

Nick Cawley, Senior Strategist
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Mexican Peso (USD/MXN) Price, Analysis and Chart:

  • USD/MXN mixed messages taint the pair’s outlook.
  • US dollar likely to determine the next move.
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USD/MXN Going Nowhere in the Short-Term

The next move in the US dollar will be the catalyst for USD/MXN with the pair currently trading in a narrow range. Price action over the last three days has been limited with Tuesday’s bullish candle keeping the pair in check for now. The sell-off in the US dollar basket (DXY) seen this month has slowed and while the greenback looks oversold it is struggling to move higher. The sharp increase in new COVID-19 cases in the South of the USA is weighing down on risk sentiment and may eventually lead to a USD bid as the safe-haven currency of choice. Countering this, the daily chart remains weak with the greenback below all three moving-averages, adding to the recent negative sentiment.

US Dollar Basket (DXY) Daily Price Chart (December 2019 – July 10, 2020)

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USD/MXN currently sits between two Fibonacci retracement figures, the 50% level at 22.153 and the 38.2% level at 23.009. The pair may find some further upside after breaking and opening above the 50-dma (blue line) while the 20-dma (red line) is currently being tested to the upside. A break above 38.2% Fib would see the multi-week high at 23.23 the next likely level of resistance, while a move below Fib support would bring 21.85 into play. A period of consolidation is expected in the short-term as the US dollar decides its next move.

USD/MXN Daily Price Chart (December 2019 – July 10, 2020)

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Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

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.

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