USD/MXN: Bear Sentiment Grows as Downward Pace Intensifies

Robert Petrucci

Bearish momentum within the USD/MXN has escalated early this week and speculators may still want to pursue downward tracks.

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The USD/MXN has begun to demonstrate an ability to sustain lower values, which are also important long-term support levels. The USD/MXN is within territory it last traded in earnest in early March of 2020. Support levels within the current value range are scarce and, if they prove to be vulnerable, speculators may expect additional displays of downward momentum to gather pace.

Trading early this morning is near the important ratio of 19.60000, and the next important support level that could be tested next if this current value proves to be within a bearish move is 19.53000. Resistance levels the past week of trading have proven to be durable within the USD/MXN, and what should intrigue speculators is the capability the Forex pair has shown to stay safely trade below the 20.00000 value.

Current resistance levels have incrementally lowered early this week and the 19.74000 juncture may prove to be durable as a stop loss ratio. Reversals remain a definite possibility that traders need to consider and protect against, but the bearish trend of the USD/MXN has certainly taken on the look of intensifying. The question which needs to be answered now is if the current value range of the Forex pair has additional room to traverse lower and, if yes, how much?

Technical traders should look at one-year charts to glimpse a quick perspective regarding the potential of the USD/MXN to find more bearish momentum. Technically, it appears that if the 19.53000 to 19.36000 levels begin to be tested, a further breakdown of the USD/MXN could happen.

Sellers should protect themselves if they pursue downward action in the USD/MXN by using stop losses. Contrarian traders who simply want to look for small reversals higher can certainly speculate too, based on the notion that bearish sentiment does have a tendency to pause once in a while and cyclical reversals higher are natural. However, the trend of the USD/MXN does continue to look bearish, and stepping in front of this train may prove dangerous.

Speculators who continue to short the USD/MXN should pay attention to resistance levels above. Technical charts indicate that a bounce above the 19.74000 level could spark short-term reversals higher to the 19.80000 to 19.88000 juncture, but if current resistance holds and bearish sentiment is sustained, the USD/MXN may test lower water marks near term.

Mexican Peso Short-Term Outlook:

  • Current Resistance: 19.74000
  • Current Support: 19.53000
  • High Target: 19.88000
  • Low Target: 19.44000

USD/MXN chart

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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