USD/MXN – Strong Resistance in the Way of Dollar Rolling vs Peso
- USD/MXN overcoming resistance necessary for rally
- Levels, lines to watch in case of a breakdown
USD/MXN overcoming resistance necessary for rally
USD/MXN has had some difficulty around the 23-mark, as it continues to struggle to climb above this important threshold of resistance. Support from March has become formidable and needs to be crossed if we are to see higher prices.
A breakout above will have other levels in the 23s in focus, as it will try and roll higher towards the 24s and 25s, the congestion period from the spring. However, if it breaks the underside trend-line of the developing ascending wedge and below 22.28 then risk shifts towards 21.45, the monthly low.
How things play out in the near-term could ripple out over the intermediate-term. Stocks act like they might roll over but keep coming back. If the S&P takes off again to the upside then MXN could reassert itself alongside of other EM currencies. If it sells off, then look for it to flop and USD/MXN to advance above resistance towards the spring highs.
MXN/JPY, we looked at last week – this has strong support around the 4.64 level, with several recent tests. A break below likely means we are seeing stocks roll over, while strength likely equals the opposite. A break of 4.64 will have the March lows at risk, while a hold keeps the outlook neutral to bullish.
USD/MXN 4-hr Chart (wedging up)
MXN/JPY 4-hr Chart (4.64 support)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.