- USD/MXN is seen consolidating in a narrow trading band through the early European session.
- The technical setup favours bearish traders and supports prospects for a retest of the YTD low.
- A move back above the 23.6% Fibo. level is needed to negate the near-term bearish outlook.
The USD/MXN pair lacks any firm intraday direction on Thursday and oscillates in a narrow trading band, below the 16.85 level through the early European session.
From a technical perspective, spot prices currently hover around the confluence comprising of the 200-hour Simple Moving Average (SMA) and the 61.8% Fibonacci retracement level of the recent modest recovery from the lowest level since December 2015. Some follow-through selling below the overnight swing low, around the 16.80 area, will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move.
Meanwhile, oscillators on the daily chart - though have been recovering - are still holding in the bearish territory and have again started gaining negative traction on hourly charts. This, in turn, suggests that the path of least resistance for the USD/MXN pair is to the downside. Hence, a subsequent slide back towards challenging the multi-year low, around the 16.70 region touched last week, looks like a distinct possibility.
Sustained weakness below the latter will be seen as a fresh trigger for bearish traders and expose the next relevant support near the 16.60 region. The USD/MXN pair could extend the downward trajectory and eventually drop to October/November 2015 lows, around the 16.3555-16.3250 area.
On the flip side, the 50% Fibo. level, around the 16.8740-16.8745 region now seems to act as an immediate strong barrier. A sustained strength beyond might trigger a short-covering move towards the 16.9200 zone en route to the 16.9600-16.9700 supply zone. The latter coincides with the 23.6% Fibo. level, which if cleared decisively will negate the negative outlook and lift the USD/MXN back above the 17.00 mark.
USD/MXN 1-hour chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Pound Sterling edges higher after BoE rate cut, focus shifts to Governor Bailey – LIVE
The Bank of England (BoE) lowered the policy rate by 25 basis points to 4.75% following the November meeting, as expected, and said that the budget is forecast to boost inflation. BoE Governor Bailey will speak on the policy outlook in a press conference next.
EUR/USD clings to gains above 1.0750 amid US Dollar pullback
EUR/USD holds higher ground and trades above 1.0750 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.
Gold recovers above $2,660, awaits Fed rate decision
Gold recovers slightly following Wednesday's sharp decline and trades above $2,660. The benchmark 10-year US Treasury bond yield struggles to push higher after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.
Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory
The Federal Reserve is widely expected to lower the policy rate after Donald Trump won the US presidential election. Fed Chairman Powell’s remarks could provide important clues about the rate outlook.
Outlook for the markets under Trump 2.0
On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.