The US Dollar pressed higher against the Mexican Peso this week with USD/MXN up more than 0.7% heading into the US open on Thursday. The advance is in its’ third consecutive week and takes price into the monthly range highs - we’re looking for a reaction up here for guidance. These are the updated targets and invalidation levels that matter on the USD/MXN technical price charts.

MEXICAN PESO PRICE CHART – USD/MXN DAILY

(Click on image to enlarge)

Chart Prepared by Michael Boutros, Technical Strategist; USD/MXN on Tradingview

Technical Outlook: In my last Mexican Peso Price Outlook we noted that the USD/MXN recovery was,“facing the first test of support on this pullback. From a trading standpoint, look for downside exhaustion ahead of 21.9859 IF price is indeed heading higher with a breach above the April lows needed to suggest a mores significant low was registered this month.” Price briefly registered a low at 21.8905 the following day before reversing sharply higher to close back above monthly open support at 22.1495. The rally is now stalling at the June opening-range highs and leaves the immediate advance vulnerable while below this threshold.

USD/MXN has continued to trade within the confines of a descending pitchfork formation extending off the yearly high with initial daily support seen at the highlighted trendline confluence near ~22.5600. Critical support and broader bullish invalidation remains at 22.0257/1503.

MEXICAN PESO PRICE CHART – USD/MXN 120MIN

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Notes: A closer look at Peso price action shows USD/MXN trading within an embedded ascending pitchfork off the monthly lows – look for support ahead of the weekly open at 22.5800 IF price is heading higher on this stretch. A topside breach exposes subsequent objectives at the 38.2% retracement of the April decline / median-line at 23.1089and key resistance at the April low / 100% extension at 23.2710/3740- a close above would be needed to fuel the next leg higher towards confluence daily resistance at 23.52491/6189.

Bottom line: The USD/MXN advance is testing resistance at the monthly range highs and we’re looking for a reaction here for guidance. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops - look for downside exhaustion ahead of the weekly open on pullbacks with a breach of the monthly highs needed to keep the advance viable. Ultimately, a larger advance may offer more favorable opportunities closer to downtrend resistance. We’ll require a break below 22.0570 to put the bears back in control.