USD/MXN Technical Analysis: Peso Breaks Down as USMCA Lingers
USD/MXN TECHNICAL ANALYSIS, USMCA – Talking Points:
- USD/MXN has broken near-term resistance, hinting at gains ahead
- Breaching resistance near 20.00 would mark major bullish bias shift
- Stalled USMCA passage might provide fundamental fuel for gains
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The US Dollar may be starting the next leg in a more than two-year uptrend against the Mexican Peso. USD/MXN bounced from support guiding it higher since July 2017, breaking above resistance defining the nearer-term down move from August’s swing top.
The next substantial upside hurdle lines up at 19.88, a chart inflection point in play since mid-year. Securing a foothold above that on a daily closing basis would position the currency pair to challenge resistance capping forays to the upside since June 2018.
Clearing that barrier – now just above the 20.00 figure – may mark a major bullish regime change and set the stage for substantial upside follow-through in the weeks to follow. Invalidating the constructive bias requires a close below the outer layer of upward-sloping support, now at
Daily USD/MXN chart created with TradingView
Delaying passage of the USMCA – the trade pact that the US negotiated with Canada and Mexico to replace NAFTA – might well offer a fundamental catalyst for USD/MXN gains. The Trump administration and Democrats in the House of Representatives failed to agree on a path forward this week.
A Thursday meeting between House Speaker Nancy Pelosi and US Trade Representative Robert Lighthizer was reportedly “productive”, but soundbites from the sit-down played down the likelihood of a deal before the calendar turns to 2020. Canada is yet to ratify the deal as well. Mexico has done so.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.