USD/MXN Technical Outlook: USD Weakens More vs Peso as Support Levels Break
USD/MXN Technical Highlights:
- Dollar strong, risk appetite strong – No Bueno for USD/MXN
- Support levels keep breaking, with long-term trend-line up next
Dollar strong, risk appetite strong – No Bueno for USD/MXN
USD/MXN has been in a persistent trend since the top created in the spring and support levels keep on breaking, with the 2019 high at 20.25 the most recent level to break. There aren’t any visible horizontal support levels to worry about at this juncture, but there is a minor underside trend-line from July that lies near a trend-line from 2014.
The long-term trend-line is only a “two point” trend-line, meaning it is a trend-line that meets the bare minimum requirement to be a trend-line, so it may not be the sturdiest form of support. It would be a good spot to see USD/MXN hold if the long-term trend is going to remain intact.
A drop to the 2020 low at 18.52 would bring the trend in question, and a break would seriously undermine it and potentially lead to a broader trend reversal. A bearish long-term trend reversal could take a fair amount of time to become clear, but that would be an important technical event to start with.
At this time though the trend is still intact. From a short-term standpoint, risk/reward on fighting the downtrend since the spring appears to be a losing proposition. Support is nearing, but we want to see if this can first attract buyers before getting bulled up. Would-be shorts appear to be in the driver’s seat for now. Watch closely how price reacts if support is reached to determine whether or not to continue running with a bearish bias.
With the USD generally weak/risk appetite generally strong theme persisting, it will take a reversal in that theme/sentiment to bring some life back into USD/MXN.
USD/MXN Daily Chart (Support breaking, trend clearly down)
USD/MXN Weekly Chart (long-term trend being put to the test)
Resources for Forex Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
---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.