The USD/MXN exchange rate dropped to an almost 4-year-and-a-half month low around 18.4485, a level last seen in October 2018, extending its losses by 0.89% in the week. This comes as a result of the Mexican Peso (MXN) showing resilience to register a daily loss against the US Dollar (USD). Prices were reluctant to break solid resistance around the 20-day Exponential Moving Average (EMA) at 18.7999, and the USD/MXN closed with gains of 0.31%.
However, the USD/MXN dropped for two consecutive days, and it’s on its way toward the 18.00 psychological level, as it has decisively broken the $18.50 mark. The USD/MXN’s next support would be August 7, 2018, daily low at 18.4047. Breach of the latter and the next support would be the psychological $18.00 barrier. Once cleared, the USD/MXN would dip to April 17, 2018, swing low at 17.9388, which would be up for grabs.
On the flip side, if the USD/MXN reconquers $18.50, that could open the door for recovery. Therefore, the USD/MXN first resistance would be the 20-day EMA At 18.7312, followed by the confluence of the February 9 daily high and the 50-day EMA around 18.9922. Once cleared, the next stop will be the 100-day EMA at 19.2869.
The USD/MXN daily chart shows that the pair is trading below the 20-day and 50-day EMA, and the MACD indicator is in the bearish zone. This suggests that the pair could remain bearish in the short term. The Relative Strength Index (RSI) is trading at 28.20, indicating that the pair is trading in the oversold zone.
In conclusion, the USD/MXN is trading below the critical support level of $18.50, and a break below $18.40 would pave the way toward $18.00. On the flip side, if the USD/MXN reconquers $18.50, that could open the door for recovery. Therefore, the USD/MXN first resistance would be the 20-day EMA At 18.7312, followed by the confluence of the February 9 daily high and the 50-day EMA around 18.9922. Once cleared, the next stop will be the 100-day EMA at 19.2869. The USD/MXN daily chart suggests that the pair could remain bearish in the short term.
Overall, the USD/MXN is trading in a bearish trend and the pair could remain bearish in the short term. A break below $18.40 would pave the way toward $18.00, while a break above $18.50 could open the door for recovery. Key technical levels for the USD/MXN are the 20-day EMA At 18.7312, the confluence of the February 9 daily high and the 50-day EMA around 18.9922, and the 100-day EMA at 19.2869.
