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Mexican Peso Outlook: USD/MXN Plunges into Yearly Trend Support

Mexican Peso Outlook: USD/MXN Plunges into Yearly Trend Support

Michael Boutros,
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Mexican Peso Technical Price Outlook: USD/MXN Near-term Trade Levels

  • Mexican Peso updated technical trade levels – Weekly & Daily Charts
  • USD/MXN sell-off now testing yearly uptrend support – bears vulnerable
  • Key support 20.2813/3454– Broader bearish invalidation 20.8377/9416

The US Dollar plunged more than 1.2% against the Mexican Peso this week with USD/MXN now down nearly 6% off the monthly highs. A reversal off uptrend resistance has now taken price into yearly trend support on the heels of yesterday's FOMC rate decision and we’re looking for inflection off this threshold in the days ahead with the bears vulnerable near-term. These are the updated targets and invalidation levels that matter on the USD/MXN technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Peso setup and more.

Mexican Peso Price Chart – USD/MXN Weekly

Mexican Peso Price Chart - USD/MXN Weekly - US Dollar vs Mexican Peso Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/MXN on Tradingview

Technical Outlook:In my last Mexican Peso Price Outlook (January) we noted that USD/MXN price decline was, “challenging the monthly opening-range with USD/MXN probing the lows- watch the weekly close here.” The level in focus was the December 2017 high-week reversal close at 19.6402 – price briefly registered an intra-week low at 19.5485 before reversing sharply higher to close back above the yearly open at 19.8939. USD/MXN has surged more than 10.6% off that low before posting a massive reversal candle last week with the decline now testing confluence support at the 2021 trendline / the 61.8% Fibonacci retracement of the yearly range at 20.3454- we’re looking for possible inflection here.

Mexican Peso Price Chart – USD/MXN Daily

Mexican Peso Price Chart - USD/MXN Daily - US Dollar vs Mexican Peso Trade Outlook - Technical Forecast

Notes: A closer look at Peso price action shows USD/MXN breaking below the monthly opening-range low yesterday with the decline now stalling into confluence support at the 61.8% extension of the monthly decline / 61.8% retracement at 20.2813/3454. Initial resistance at the high-week reversal close at 20.6756 backed by the September low / monthly open / 100% extension at 20.8377/9416- a breach / close above this threshold would b needed to shift the broader focus back to the topside in USD/MXN. A close below this support zone would likely fuel another bout of accelerated losses for the greenback with such a scenario exposing the 100% extension / objective yearly open at 19.8794/8939.

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Bottom line: The Mexican Peso price rally has taken USD/MXN into confluence uptrend support and leaves the immediate short-bias vulnerable while above 20.2812/3454. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops- be on the lookout for topside exhaustion ahead of the monthly open IF price is indeed heading lower. That said, respect a breach above the monthly open here as the US Dollar attempts to make a stand. We’ll update this in Monday’s webinar.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy


Key US / Mexico Data Releases

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--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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