USD/MXN Week Ahead: Bearish Pressure Seems Set to Continue
Main USD/MXN Talking Points:
- USD/MXN resumes downside trajectory
- A fall below 21.45 could help form a bearish break
The US Dollar has been able to recover some upside towards the end of the week, helped by a better than expected NFP report. But downside momentum has not rescinded against the Mexican Peso, as USD/MXN continues to push lower, resting now around the lows in June, ready to settle below 21.50.
USD/MXN daily chart (04 February – 04 August 2020)
A fall below 21.45 could lead to a rapid increase in bearish pressure, with 21.19 being the next key level to watch, it being the 76.4% retracement from the 18.55-25.46 rally. Bearish consolidation is also supported by the bear cross in moving averages, with the 20-day crossing below the 200-day average. The stochastic indicator is starting to venture into oversold territory below the 20 mark, but we could see more declines before a cyclical correction comes into play.
Whilst declines look set to continue, I think there is a fair bit of support around the 20.20 area, given this would mean a close of the coronavirus gap. This area could yield an increase in buyer support but upside is likely limited beyond 22.80.
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.