USD/MXN Price Analysis: Remains below 23.6% Fibo. hurdle near mid-16.00s, or weekly high

USD/MXN trades with a positive bias for the third straight day, albeit lacks follow-through.
The technical setup supports prospects for the emergence of fresh selling at higher levels.
Reduced Fed rate cut bets continue to underpin the USD and should limit the downside.

Haresh Menghani FXStreet

The USD/MXN pair attracts some buyers for the third successive day on Thursday, albeit lacks bullish conviction and remains below the weekly top, around the 16.50-16.55 area touched the previous day.

The aforementioned area represents the 23.6% Fibonacci retracement level of the January-April downfall and should act as a key pivotal point for short-term traders. A sustained strength beyond might trigger a short-covering rally and lift the USD/MXN pair to the next relevant hurdle near the 16.65-16.70 supply zone, or the 38.2% Fibo. level. Some follow-through buying should pave the way for a move towards challenging the 16.85 confluence hurdle, comprising the 100-day Simple Moving Average (SMA) and the 50% Fibo. level.

Meanwhile, technical indicators on the daily chart – though have been recovering – are still holding in the negative territory and suggest that any meaningful upside might still be seen as a selling opportunity. This, in turn, warrants some caution for bullish traders and before confirming that the USD/MXN pair has bottomed out in the near term. In the meantime, the 16.30-16.25 area, or the lowest level since August 2015, is likely to protect the immediate downside, below which spot prices could slide to test the 16.00 round-figure mark.

The hotter US consumer inflation figures released on Wednesday forced investors to push back expectations for the first interest rate cut to September from June. Moreover, the markets are now pricing in the possibility of less than two 25 basis point rate cuts in 2024, which assists the US Dollar (USD) to stand tall near the YTD peak. This should assist the USD/MXN pair to defend the aforementioned handle, which if broken decisively should pave the way for the extension of an over a two-month-old downtrend witnessed from the YTD peak touched in January.

USD/MXN daily chart

USD/MXN

Overview
Today last price	16.4575
Today Daily Change	0.0161
Today Daily Change %	0.10
Today daily open	16.4414

Trends
Daily SMA20	16.609
Daily SMA50	16.8549
Daily SMA100	16.9958
Daily SMA200	17.1756

Levels
Previous Daily High	16.5213
Previous Daily Low	16.3021
Previous Weekly High	16.6737
Previous Weekly Low	16.4403
Previous Monthly High	17.0655
Previous Monthly Low	16.5116
Daily Fibonacci 38.2%	16.4375
Daily Fibonacci 61.8%	16.3858
Daily Pivot Point S1	16.3219
Daily Pivot Point S2	16.2024
Daily Pivot Point S3	16.1027
Daily Pivot Point R1	16.5411
Daily Pivot Point R2	16.6408
Daily Pivot Point R3	16.7602

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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