Can Bears Push USDMXN Below 22.00?

Summary:

USDMXN started the week on negative foot as the USD weakness continues across the board. The U.S. Durable Goods Orders came in at 7.3% beating the

USDMXN started the week on negative foot as the USD weakness continues across the board. The U.S. Durable Goods Orders came in at 7.3% beating the expectations of 7.2% in June. The Durable Goods Orders excluding Defense came in at 9.2%, below the forecasts of 18.6% while the June Durable Goods Orders excluding Transportation registered in at 3.3$ below the estimates of 3.5%.

Overall the figures showed that confidence continues to recover in the USA economy. However, investors worry that the rising number of new infections would halt the reopening process in the country, and will force the government to inject fresh stimulus to the economy.

U.S. Fed in its policy meeting on Wednesday expected to keep interest rates unchanged but might reiterate the need for more stimulus to the economy, and the use of more tools in the fight against the coronavirus damage.

Mexican peso capitalizes the risk-on sentiment as the U.S. and Mexican economy continue the rebound from the coronavirus crisis. Interest rates differential supports Mexican peso, despite the consecutive interest rates cuts by the Central Bank of Mexico.

USDMXN Price Levels to Watch

USDMXN is 1.00% lower at 22.0639 as the pair meet dedicated offers around the 50-day moving average since July. The pair today attempts to break below the descending triangle, which if happens we might see a move down to 21.50 area.

Let’s see some support levels for the pair; immediate support for the pair would provide today’s low at 22.0526, while a close today below that level might confirm the breakout of the triangle which points to a fast correction down to 21.50, which guards the 200-day moving average at 21.1089.

Bullish traders need to see a break above the 50-day moving average (22.4417) to place more bids. Above 22.4417, the next target for USDMXN would be at 22.6987 where the falling trend line that started from the March highs cross. The 200-day moving average would cap any upside move above at 23.1474.