USD/MXN Technical Outlook: USD at Risk of Breaking Support vs Peso
- USD/MXN weakness continues with USD selling, risk appetite steady
- Crossroad of support just below, but not confident it will hold
USD/MXN risks breaking support soon
USD/MXN has been slowly withering since an early-month plunge. This has support in focus via a few different angles, none of which are extremely important but together could amount to some type of floor. Or not.
Support comes in by way of the 2018 high, which is right around where the September bounce began and created a low at 20.84. This is in confluence with a downward slope from the April high, a line that has had meaning on several occasions in the past three months as mostly resistance, but also support as recently as October 9.
There is also a trend-line running underneath the June and September low that is the parallel to the trend-line running over peaks created in June, August, and September.
The intersection of these various angled lines of support does make for a spot of interest, but given that two of them are running in the direction of the downtrend, it does take some of the importance away.
Nevertheless, support is support until it’s not. The area from 20.84 to ~20.55 is considered a meaningful zone to watch for a bounce to develop. Right now, what undermines the case for a rally is the stabilization in risk appetite (stocks) and general dollar weakness.
If, however, we see a sharp(ish) reversal off support, then a recovery bounce could at least be in order. How high is tough to say at this juncture with the general trend/tone working against USD/MXN. A break of support is likely to lead to a minor level from 2018 at 20.25 first, then potentially lower.
USD/MXN Daily Chart (crossroad of 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.