USD/MXN Price Analysis: Consolidates its recent slide to multi-year low, hovers around 16.75

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.

Haresh Menghani FXStreet

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

Key levels to watch

USD/MXN

Overview
Today last price	16.7503
Today Daily Change	-0.0033
Today Daily Change %	-0.02
Today daily open	16.7536

Trends
Daily SMA20	17.0712
Daily SMA50	17.353
Daily SMA100	17.786
Daily SMA200	18.5466

Levels
Previous Daily High	16.9188
Previous Daily Low	16.7167
Previous Weekly High	17.1746
Previous Weekly Low	16.7167
Previous Monthly High	17.7286
Previous Monthly Low	17.0243
Daily Fibonacci 38.2%	16.7939
Daily Fibonacci 61.8%	16.8416
Daily Pivot Point S1	16.674
Daily Pivot Point S2	16.5943
Daily Pivot Point S3	16.4719
Daily Pivot Point R1	16.876
Daily Pivot Point R2	16.9984
Daily Pivot Point R3	17.0781

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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