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USD/MXN Technical Analysis: Peso Breaks Down as USMCA Lingers

USD/MXN Technical Analysis: Peso Breaks Down as USMCA Lingers

2019-11-22 02:00:00
Ilya Spivak, Head Strategist, APAC
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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

Where will markets end 2019? See our Q4 forecasts for currencies, commodities and stock indexes!

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

US Dollar vs Mexican Peso price chart - daily

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.

USD/MXN TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

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