USDMXN Outlook - Staring at a Fresh Multi-Month Low on Renewed US Dollar Weakness
US Dollar vs Mexican Peso Price, News and Analysis:
- USDMXN nears a fresh eight-month low.
- A full retrace to the mid-February low cannot be ruled out.
The Mexican Peso, and emerging market currencies as a whole, continues to move higher on growing optimism that an effective covid-19 vaccine is a matter of a few weeks away. Recent test results from Moderna and Pfizer have shown their drugs to be around 95% effective, while the latest news from the Oxford/Astra Zeneca trial shows a strong immune response in adults over 50 years old. This growing vaccine optimism has helped to weaken the safe-haven US dollar and boost the appeal of emerging market currencies.
Next week’s calendar is unlikely to shift market sentiment unless the final Q3 GDP release is markedly different from the initial reading of 12% on the quarter in the three months to September. Year-on year the economy is likely to show the economy contracting back 8.6% compared to -18.7% in Q2.
The daily USDMXN chart shows the pair just a handful of pips away from breaking below 20.00 for the first time since early-March. A confirmed break and open below the big figure will likely open the way to further losses with the next level of horizontal support seen in mid-February around 18.50. All three simple moving averages are negative – 50-dma/200-dma death-cross formed on September 10, 20-dma trading below the 50-dma from October 18 – while the series of lower highs and lower lows from the April 6 high remain in place. Despite the sell-off, the CCI indicator is not in oversold territory.
USDMXN Daily Price Chart (January – November 20, 2020)
What is your view on the Mexican Peso – 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.