USD/MXN TECHNICAL OUTLOOK: BEARISH
The Mexican Peso enjoys another great week against the USD after a corrective pressure saw the USD/MXN trading higher after announcing the Pfizer vaccine. The USD/MXN is currently positioned after just over the 18.55 and 25.46 surges Fibonacci (76.4% retracement level). A key zone that sellers need to break under to consolidate more downtrend momentum.
USD/MXN Daily chart
Considering the risk-on sentiment was hampered at the start of November just over the 20.00 peso level, a sustained break under this level will most likely attract other sellers. As of today, the question is whether this Mexican Peso can enjoy extra weeks of relative strength without having to face a strong u[trend reversal. In such situations, where news headlines spark quick moves, it’s highly likely that we shall see more profit-taking on the speculative positions that might be a huge motive behind a possible reversal of price if we see the USD/MXN break under 20.00.
Incase we turn to the futures market, it’s clear that despite the downtrend corrections that happened in mid-week, a positive momentum is still strong, alluding to continued risk on the drive that will benefit the Mexican Peso. If this were the case, the next price target would be 19.87, previously held the resistance zone before the coronavirus induced rise back in march.
On the other hand, incase the risk-on sentiment is affected and we see a newer upside reversal, immediate resistance might be found at the dropping trendline from the previous highs back in the month of march that has lately come back after having been broken to the uptrend, which means the 20.30 will offer a zone for more sellers to become effective, before they start to focus on the subsequent resistance with last weeks highs at 20.69, followed by a key psychological 21.00 level, where the 50-day SMA currently converges.