- USD/MXN’s strong downtrend continues as emerging market currencies gain against the US dollar.
- USD/MXN eyes 17.5000 support; Upside potential remains limited with key resistances at 17.9492 and 18.2263.
USD/MXN fell to fresh 6-year lows at 17.7462, reached in mid-American session, despite encouraging data from the US economy, which failed to strengthen the US dollar (USD). At the time of writing, the USD/MXN pair is trading at 17.7480, down 0.92%.
A good US employment report improved market sentiment. Therefore, the high beta currencies, along with their emerging market peers, rallied strongly against their counterpart, the US dollar.
USD/MXN Price Action
The USD/MXN pair remains in a strong downtrend, posting losses of more than 9% so far this year. Notably, since the USD/MXN pair dipped below the 19.00 figure, the USD/MXN has tested the level for ten days, although buyers were unable to break it. In fact, traders remain short the USD/MXN pair, despite the fact that speculation surrounding the Bank of Mexico’s (Banxico) pause in its tightening cycle in May, has not triggered currency exits from the markets. emerging.
Momentum indicators such as the Relative Strength Index (RSI) continue to push lower, with room before becoming oversold. The 3-day exchange rate (RoC) turned neutral and resumed lower as sellers stepped in. Therefore, the path of least resistance for the USD/MXN is to the downside.
That being said, the next support for the USD/MXN would be 17.5000. A break of the latter would expose the July 2017 swing low at 17.4515 before falling to 17.0000.
Conversely, if the USD/MXN recovers to the May 5 daily high at 17.9492, it could form a bullish engulfing candlestick pattern, which could justify further gains. The next long stop would be 18.00, followed by the 50-day EMA at 18.2263.
USD/MXN Daily Chart
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.
