USD / MXN falls below 21.00 amid mixed market sentiment

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  • USD / MXN extends the weekly decline, falling for the third day in a row.
  • Mixed market sentiment favors risk-sensitive currencies like the MXN to the detriment of the USD.
  • USD / MXN Price Forecast: Has a bullish bias unless the MXN bulls stay below 21.00.

The USD/MXN it is falling during the American session, down 0.47%, trading at 20.95 at the time of writing. Market sentiment is mixed as European stock indices ended the day lower, while US stocks are on the rise, except for the Dow Jones, which is down 0.15%.

In the evening session, upbeat news about the efficacy of the Omicron variant vaccine boosted market sentiment. The first laboratory studies conducted with two of the most successful COVID-19 vaccines showed that a third vaccine neutralizes the Omicron variant. That improved risk appetite for riskier assets, favoring risk-sensitive currencies like the Mexican peso, which rose nearly half a percent against the dollar.

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That said, the Mexican peso remained subdued in the overnight session, hovering around 21.00, although, overlapping the European and US session, the Mexican peso strengthened, falling to a new weekly low at 20.8840. Meanwhile, the US dollar index, which tracks the dollar’s performance against a basket of its rivals, loses almost 0.50%, settling at 95.88, a headwind for the USD / MXN pair.

The empty Mexican and US economic docket would leave USD / MXN traders leaning towards the dynamics of market sentiment and the US Consumer Price Index for November, to be released on Friday.

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USD / MXN Forecast: Technical Outlook

The USD / MXN daily chart shows that the pair has a bullish bias, as evidenced by the daily moving averages (DMA), which are well above the price of the pair with a slight horizontal slope. The pair bounced off the previous high on October 12, a resistance level turned into support at 20.9002, about 400 pips from the 61.8% retracement of the Fibonaccci level. However, the USD bulls would need a daily close above 21.00 to resume the uptrend.

In that result, the first resistance would be the 50% retracement of the Fibonacci level at 21.2006. A clear breakout of the latter would expose the 38.2% Fibonacci retracement at 21.4252, followed by a weekly high at 21.6338.

On the other hand, if the USD / MXN records a daily close below the 61.8% Fibonacci retracement retracement, that would open the door for further losses. The first support would be the 50 DMA at 20.7256, followed by the 78.6% Fib retracement at 20.6564.


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