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In early January USD/MXN briefly slid below its December low at 19.7002, to its current January trough at 19.6006, near the 200-week moving average, before recovering. The pair is set to remain above this latter level with the 20.6656/20.8164 neighborhood being in focus, per Commerzbank.

Key quotes

“Since positive divergence on the daily RSI accompanied the recent low we decided to neutralise our forecast and expect range trading above the 19.6006 to be seen with the 20.6656/20.8164 being in focus. It consists of the mid-September and October lows as well as the late November and December highs and also the 2020-2021 downtrend line and is expected to cap in the near future. Should this not be the case, we would become bullish and would target the 200-day moving average at 21.8752.” 

“Currently, unexpected failure at 19.6006 would open the way for the breached 2017-2020 downtrend line at 19.3158 to be reached. This we do not anticipate to happen, though, and instead, we should see a gradual rise over the next few days and then sideways trading for a while.”