- USD/MXN range-bound on Friday and consolidates its weekly gains.
- The technical setup favors the bulls and supports the prospects for further gains.
- Any significant corrective dip could attract some buying and remain supported.
The USD/MXN pair is struggling to capitalize on its weekly gains recorded over the past three days and wavers between tepid gains and small losses during the European session on Friday. The pair is trading around 18.3185, down less than 0.10% on the day, and remains close to the nearly two-week highs reached on Thursday.
From a technical standpoint, USD/MXN bounced last week at the resistance-turned-support confluence of 17.7550-17.7545, which comprises the 200-day SMA and a multi-month descending trend line of antiquity. The subsequent move higher, coupled with the positive oscillators on the daily chart, favors the bulls and suggests that the path of least resistance for spot prices is up.
That said, before opening new bullish positions, it would be prudent to wait for buying to occur above the 18.4935 area, the highest level since late March which was reached earlier this month. The USD/MXN pair could continue to rise towards the 18.8145-18.8150 area, which represents the 50% Fibonacci retracement of the decline observed in July, which if exceeded will set the stage for further increases.
On the other hand, any correction could find good support near the 18.1100 level. Next is the round level of 18.0000, below which the USD/MXN pair could retest the weekly lows, around the 17.8720-17.8715 area. Some follow-through selling will expose the 200-day SMA support, currently around the 17.7425 area, before the pair falls to the 23.6% Fib, around the 17.6595-17.6590 area.
This last level coincides with the aforementioned downtrend line resistance breakout point and should act as a pivotal point. A convincing break below that level will shift the short-term bias back in favor of the bears and make the USD/MXN pair vulnerable to weakening further.
USD/MXN daily chart
Additional technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
