Over the last six trading sessions, the USD/MXN price has dropped more than 3.5% as the Mexican peso has regained ground lost due to the ongoing conflict between Mexico and the White House. For now, the bearish bias has been driven by the March 6th extension on the tariff imposition, which gave the Mexican government a reprieve until April 2nd. This has allowed the Mexican peso to maintain a steady uptrend in the short term, sustaining selling pressure on USD/MXN.
Lateral Range:
Since early November 2024, USD/MXN has been oscillating within a sideways range, marked by a ceiling at 20.89 pesos per dollar and a floor at 20.07 pesos per dollar. The current bearish bias has pushed the price back to the lower boundary of the channel, and the weakening momentum of the last few sessions could reinforce the support barrier that remains intact.
ADX Indicator:
The ADX line has started showing consistent neutrality near the 20 level, suggesting that recent movements lack strong trend direction. This indicates that neutrality may persist as the price continues approaching the support level.
MACD Indicator:
The MACD histogram shows a similar scenario, with oscillations remaining very close to the neutral 0 level. This reinforces the current indecision in the market as the price approaches the support zone.
Key Levels:
By Julian Pineda, CFA – Market Analyst
Lateral Range:
Since early November 2024, USD/MXN has been oscillating within a sideways range, marked by a ceiling at 20.89 pesos per dollar and a floor at 20.07 pesos per dollar. The current bearish bias has pushed the price back to the lower boundary of the channel, and the weakening momentum of the last few sessions could reinforce the support barrier that remains intact.
ADX Indicator:
The ADX line has started showing consistent neutrality near the 20 level, suggesting that recent movements lack strong trend direction. This indicates that neutrality may persist as the price continues approaching the support level.
MACD Indicator:
The MACD histogram shows a similar scenario, with oscillations remaining very close to the neutral 0 level. This reinforces the current indecision in the market as the price approaches the support zone.
Key Levels:
- 20.43: Near-term resistance zone, aligning with the midpoint of the broad sideways range and converging with the 50- and 100-period simple moving averages. Sustained oscillations above this level could keep the sideways range active in the long term.
- 20.07: Crucial support zone, located at the lower boundary of the broad sideways range. Consistent oscillations below this level could break the current range and pave the way for a more prolonged bearish move in the coming sessions.
- 20.89: Distant resistance zone, marking the upper boundary of the sideways channel. If the price reaches this level, it could reactivate the forgotten uptrend.
By Julian Pineda, CFA – Market Analyst
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