USD/MXN May Ignite Soon, Technical Levels, Lines to Watch
- USD/MXN may make a big move soon with markets moving
- Trading around long-term support and channel/trend-lines
USD/MXN may make a big move soon with markets moving
USD/MXN is trading around the 200-day MA in a volatile manner with stocks wobbling and the USD trying to reassert itself after a multi-month decline. The drop below the 200-day also put it under the May low which opened it up for a test of the 2018 high. Lots going on in the vicinity between 21.56 and 20.97.
If stocks continue to crumble and the Dollar surges, then despite yet having seen USD/MXN come to life it should start to do-so in relatively quick fashion. The risk sensitive pair, as seen during the coronavirus collapse in equities, can come to life in a manner that can wipe out months of choppy price action.
Keep an eye on the trend-line off the record high in April as it touches over recent peaks. A breakout above it could ignite a move towards the 23 level where there is resistance from early and mid-summer. Again, this could happen quickly if markets go into full-blown risk aversion mode.
Should markets calm or even MXN fail to act as it has previously, whether that is a direct impact from the USD or other factors, keep an eye on the lower parallel of the line running off the April high. It connects the August low with yesterday and could continue to be an under-side guide if the slide continues.
For now, there isn’t anything too actionable, but that could change in a hurry as stocks enter a seasonally weak time of the year and there are plenty of risks out there between the coronavirus, Brexit, U.S. elections, U.S./China tensions, you take your pick…
USD/MXN Daily Chart (watch support and channel/trend-lines)
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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.