Friday, July 10, 2020 8:51 AM EDT
USD/MXN GOING NOWHERE IN THE SHORT-TERM
The next move in the US dollar will be the catalyst for USD/MXN with the pair currently trading in a narrow range. Price action over the last three days has been limited with Tuesday’s bullish candle keeping the pair in check for now. The sell-off in the US dollar basket (DXY) seen this month has slowed and while the greenback looks oversold it is struggling to move higher. The sharp increase in new COVID-19 cases in the South of the USA is weighing down on risk sentiment and may eventually lead to a USD bid as the safe-haven currency of choice. Countering this, the daily chart remains weak with the greenback below all three moving-averages, adding to the recent negative sentiment.
US DOLLAR BASKET (DXY) DAILY PRICE CHART (DECEMBER 2019 – JULY 10, 2020)
USD/MXN currently sits between two Fibonacci retracement figures, the 50% level at 22.153 and the 38.2% level at 23.009. The pair may find some further upside after breaking and opening above the 50-dma (blue line) while the 20-dma (red line) is currently being tested to the upside. A break above 38.2% Fib would see the multi-week high at 23.23 the next likely level of resistance, while a move below Fib support would bring 21.85 into play. A period of consolidation is expected in the short-term as the US dollar decides its next move.
USD/MXN DAILY PRICE CHART (DECEMBER 2019 – JULY 10, 2020)
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