USD/MXN Price Analysis: Remains below 23.6% Fibonacci, close to weekly high around 16.50

  • USD/MXN is trading with a positive bias for the third day in a row, although it lacks follow-through.
  • The technical situation favors the appearance of new sales at higher levels.
  • Reducing Fed rate cut bets continues to support the USD and should limit declines.

The USD/MXN pair attracts some buyers for the third day in a row on Thursday, although it lacks bullish conviction and remains below the weekly high, around the 16.50-16.55 area touched the previous day.

This zone represents the 23.6% Fibonacci level of the January-April decline and should act as a key point for short-term traders. Sustained strength beyond could trigger a short rally and lift the USD/MXN pair to the next relevant hurdle near the 16.65-16.70 supply zone, or the 38.2% Fibonacci level. Continued buying should pave the way to challenge the 16.85 confluence hurdle, which comprises the 100-day SMA and the 50% Fibo level.

Meanwhile, technical indicators on the daily chart, although they have recovered, remain in negative territory and suggest that any significant rise could be considered a selling opportunity. This, in turn, warrants some caution for bullish traders before confirming that the USD/MXN pair has bottomed in the short term. Meanwhile, the 16.30-16.25 area, or the lowest level since August 2015, is likely to protect the bearish side, below which prices could slide to test the 16.00 mark.

Higher-than-expected US consumer inflation figures released on Wednesday forced investors to push back expectations of the first interest rate cut to September. Furthermore, markets are now pricing in the possibility of less than two 25 basis point rate cuts in 2024, helping the US dollar (USD) stay close to the yearly high. This should help the USD/MXN pair defend the aforementioned zone, which if broken decisively, would pave the way for the extension of a bearish trend of more than two months from the yearly high reached in January.

USD/MXN daily chart

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USD/MXN

Panorama
Today's Latest Price 16.4534
Today's Daily Change 0.0120
Today's Daily Change % 0.07
Today's Daily Opening 16.4414
Trends
20 Daily SMA 16,609
SMA of 50 Daily 16.8549
SMA of 100 Daily 16.9958
SMA of 200 Daily 17.1756
Levels
Previous Daily High 16.5213
Previous Daily Low 16.3021
Previous Weekly High 16.6737
Previous Weekly Low 16.4403
Previous Monthly High 17.0655
Previous Monthly Low 16.5116
Daily Fibonacci 38.2% 16.4375
Daily Fibonacci 61.8% 16.3858
Daily Pivot Point S1 16.3219
Daily Pivot Point S2 16.2024
Daily Pivot Point S3 16.1027
Daily Pivot Point R1 16.5411
Daily Pivot Point R2 16.6408
Daily Pivot Point R3 16.7602

Source: Fx Street

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