USD/MXN Finally Powers through Resistance

Joe Perry
By :  ,  US Market Analyst

Although most US pairs seem have had a quiet day, USD/MXN finally muscled its way through the 19.7700 level we had discussed last week.  On Thursday, the Bank of Mexico surprised the market by cutting interest rates to 8.0% from 8.25%.  The market reaction was to sell USD/MXN into the initial market rally.  However today, the pair pushed higher to 19.8932, taking out all the weak stops with it.  This also pushed the short-term RSI into overbought territory and is currently trying to unwind back below the 70 level.

Market chart tracking the USD against the Mexican Peso. Published in Aug 2019 by FOREX.com

Source:  Tradingview, FOREX.com

Where does USD/MXN go from here?  Buyers may look to pick some up at a retest of the 19.75/19.77 area.  Stops can be placed below the rising trendline near 19.65. 

Market chart tracking the USD against the Mexican Peso. Published in Aug 2019 by FOREX.com

Source:  Tradingview, Forex.com

On a daily, the downward sloping trendline from the longer term triangle comes into play around 20.15.  The 127% extension from the highs on May 31st to the lows on July 5th come in near the same level.  Sellers may look to get in around that level, with a stop above the trendline, around 20.25. 

However as we wrote last week, it may take a  break above 20.00 or below 19.00 (the apex of the triangle) to determine the longer term direction.


Related tags: Forex USD Central Bank Mexico

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