USDMXN Higher after Mexico Consumer Confidence beat Forecasts
The DXY has begun the week on a flat note as it continues to hold above 90.0. Most USD-denominated assets are mixed today. With no major fundamentals scheduled until Wednesday’s FOMC decision, USD sentiment remains the determinant of the USD Index’s direction.
At this time, the US Dollar Index starts the week struggling to maintain Friday’s upside momentum. The latest CFTC positioning report indicates that there has been a rise in the net shorts on the greenback to the highest levels in a decade. This confirms the expectations of a broad decline in the US Dollar in 2021.
There are two possible outcomes here. On the one hand, we could see the US Dollar Index rise towards the 90.965 price level. This move would present an evolving inverse head and shoulders formation which would require an upside break of 90.965 (potential neckline) for the pattern to be complete. This could then open the door towards a projected measured move, targeted at 92.50. This move would have to take out 91.906 along the way.
On the flip side, a rejection at 90.965 could temporarily negate the completion of the inverse head and shoulders pattern. However, a resumption of the downtrend below 89.189 opens the door towards the 88.297 support target. 87.247 provides a potential additional target if the downside move is extensive.
