Looking at the technical picture of USD/MXN on our daily chart, we can see that from around the beginning of April, it has been moving lower, while trading below a medium-term downside resistance line drawn from the high of April 6th. We can see that the pair is slowly approaching one of its key support areas, near the 21.458 hurdle, marked by the lowest point of June. Although the current trend is to the downside, we would prefer to wait for a drop below that hurdle, in order to get a bit more comfortable with further declines.
If the above-discussed drop below the 21.458 zone happens, such a move would confirm a forthcoming lower low, potentially opening the door to a further move south, targeting the 21.084 area, marked by an intraday swing high of March 10th. The rate might get a temporary hold-up around there, or even bounce back up a bit. That said, if USD/MXN finds it hard to break the aforementioned downside line, that may allow the sellers to take control and send the rate lower again. If this time the bears are able to overcome the 21.458 obstacle, its break could clear the way to the 20.295 level, marked by the low of March 10th.
The RSI and the MACD are both pointing slightly to the downside, at the moment. In addition to that the RSI is below 50 and the MACD is below both, zero and its trigger line. The two oscillators show increasing downside price momentum, which comes in line with the scenario mentioned above.
On the upside, if the aforementioned downside line breaks and the price also moves above the 22.224 barrier, marked by the high of August 27th, that may attract more buyers into the game, as this break may signal a change in the current trend. USD/MXN might then drift to the highest point of August, at 22.908, a break of which could clear the way towards the 23.228 level, marked by the highest point of June.
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