- USD/MXN remains confined in a narrow trading band near its lowest level since December 2015.
- The formation of a descending channel points to a well-established downtrend and favours bears.
- A sustained strength beyond the 17.30-40 confluence is needed to negate the negative outlook.
The USD/MXN pair oscillates in a narrow range around the 16.75 region through the Asian session on Monday and consolidates its recent losses to the lowest level since December 2015.
From a technical perspective, the decline witnessed over the past four months or so has been along a downward-sloping channel, which points to a well-established short-term bearish trend. Furthermore, the USD/MXN pair's inability to attract any meaningful buying suggests that the path of least resistance is to the downside. The negative outlook is reinforced by the underlying bearish sentiment surrounding the US Dollar (USD), led by firming expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle.
That said, the Relative Strength Index (RSI) on the daily chart is already flashing oversold conditions and warrants some caution before placing fresh bearish bets around the USD/MXN pair. Hence, any subsequent fall below the multi-year low, around the 16.70 region is more likely to find decent support near the lower end of the aforementioned trend-channel, currently pegged near the 16.6240 area. That said, some follow-through selling will mark a fresh breakdown and pave the way for a further near-term depreciating move.
On the flip side, the 16.85-16.90 area now seems to act as an immediate hurdle ahead of the 17.00 round figure. This is followed by resistance near the 17.10-17.15 region, which if cleared might trigger a short-covering move and lift the USD/MXN pair beyond the 17.25 intermediate barrier, towards testing the 17.30-17.35 confluence. The latter comprises the ascending channel resistance and the 50-day Simple Moving Average (SMA) and also nears the monthly swing high. A sustained strength beyond could negate the near-term bearish outlook.
USD/MXN daily chart
-638251614548159649.png)
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
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 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.