Since the beginning of December, the Mexican Peso has been strengthening against its neighbouring US dollar. The move south in USD/MXN has been a strong one with little or no signs of recovery. But finally, the pair is finding some good support near the medium-term upside support line drawn from the lowest point of April 2018, which might lead to some recovery in the short run. We will remain cautiously-bullish for now, as we still need to see a confirmation break through one of the key resistance areas, before getting comfortable with higher levels.
A good push above the 19.218 barrier could increase the chances of seeing a further move higher, where the rate may travel towards its next potential area of resistance at 19.476, marked by the high of the 7th of January. This is where USD/MXN could meet the 200 EMA as well. But if the above-mentioned resistance area and the 200 EMA fail to stop the pair from moving higher, the rate could make its way towards the 19.691 zone, marked near the high of the 3rd of January.
Looking at our oscillators, the RSI hit 20 and rebounded somewhat and it is now pointing to the upside. This adds a bit of confidence for the bulls. The MACD, on the other hand, is still in the negative zone, running below its trigger line, but is somewhat flat now. The indicator is currently difficult to rely on.
Alternatively, if the bears are not yet willing to let go of the steering wheel and they continue to push the rate lower, a break of the aforementioned medium-term upside support line and the 19.058 level could invite even more sellers to table. USD/MXN might then travel towards the 18.910 obstacle, a break of which could send the rate lower to test the 18.725 hurdle, which is the low of the 16th of October 2018.
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