Mexican Peso Outlook - US Dollar Strength Driving USD/MXN Higher
Mexican Peso (USD/MXN) Price, Analysis and Chart:
The US dollar has been bid higher this week as investors move back into the greenback as markets turn risk-averse. In Europe, a second wave of the Covid-19 pandemic is forcing countries back into lockdown, while in the US the long-hoped-for stimulus bill remains elusive and is now unlikely until after the November 3 presidential election. The US dollar basket is also picking up a bid from a weak Euro as the single block struggles with lowly inflation and tepid growth. The Euro accounts for approximately 58% of the US dollar basket. A break and close above the September 25 high at 94.79 would help confirm the turnaround in the US dollar by breaking a series of lower highs and continuing a short-term series of higher lows.
US Dollar Basket Daily Price Chart (February – October 15, 2020)
The daily USD/MXN chart is now starting to near important resistance levels which if broken may allow the pair more room to move higher. The 20-day simple moving average (red line) has pushed back above the 50-dma (blue line) highlighting the current positive sentiment and a break and close above both of those (50-dma at 21.657 and 20-dma at 21.73) would leave the 50% Fib retracement at 22.153 the next level of resistance. A continued bull run would bring the 200-dma at 22.52 and then the September 24 multi-week high at 22.68 into play. To the downside, the 21.05 level should offer short-term support.
USD/MXN Daily Price Chart (February - October 15, 2020)
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