USD/MXN Price Analysis: Bearish, under the 200-day SMA and testing levels below 20.30
- USD/MXN drops below the 200-day SMA.
- Outlook favor the downside, price to face strong support at 20.30 and 20.05.
- Any recovery of the dollar under 20.70, likely to be unstable.
The USD/MXN posted on Wednesday the first daily close in months below the 200-day moving average and slightly under the 20.30 level. The 20.35/30 area was a strong barrier and while the cross remains below, more losses are on the table.
The next support stands at 20.15 and below a more relevant emerges at 20.00/05. A recovery of USD/MXN could take the price quickly to 20.45 but it should be seen as a correction. The critical resistance at the moment is seen around 20.70, the confluence of horizontal support, key MA and a downtrend line. A break higher would change the short-term bias from bearish to neutral/bullish.
Technical indicators look bearish. The RSI is approaching 70 and flattening, a potential sign of exhaustion, not necessarily followed by a sharp correction. A consolidation is also possible particularly if USD/MXN rises back above 20.30.
USD/MXN daily chart
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
