USDMXN – Weekly Outlook – September 10 2020

USDMXN Outlook & Technical Analysis

Introduction

The Mexican peso has been gaining against the U.S. dollar since the oil price recovery and the weak Greenback against major currencies. Let us look at the Race Option trading platform to see what the price actions tell us from the various time frames.

Fundamentals 

Mexico Fundamentals 

Mexico Consumer Confidence

The August data of the consumers’ confidence rose from 34.1 to 34.6 against the previous month’s previous data. These marks as a sign of a gradual recovery of the Mexican economy after the coronavirus pandemic’s effects. 

When the lockdown restrictions were eased, household consumption and situation have improved against the July data of 36.5 against the recent data of 38.2.

U.S. News

Unemployment claims

The weekly outcome of the numbers of individuals who officially file for unemployment for the first time in a week is what the department of labour releases. The data helps investors to know the overall trend of the country’s economy.

When the data of individuals who applied is lower than the Forecast, it is good for the economy. Still, it is not suitable for the currency if its actual value is higher than the Forecast.

The Forecast is 838K, while the previous is 881K.

USDMXN Long-term Direction: Bearish 

USDMXN Technical Analysis

Monthly Chart

USDMXN forecast -Monthly chart - 9th September 2020

Monthly Resistance Levels: 25.78118, 23.2710, 20.14248, 22.04012

Monthly Support Levels:  19.6848, 19.02762, 18.64510, 17.95144, 21.4590

The effect of the second coronavirus pandemic affected the U.S. dollar across all pairs, which led the Mexican peso to have gained against the dollar. The bulls retest of June’s candle could not go beyond the April’s support level (23.20965) turned resistance before the bears were able to engulf the bullish candle.

The bear’s surge has the momentum to push the Mexican peso to the 20.14248 and 19.02762 levels simultaneously as we continue to see a weak U.S. dollar.

Weekly Chat

USDMXN forecast -weekly chart - 9th September 2020

Weekly Resistance Levels: 25.78360, 24.88850, 24.0000

Weekly Support Levels: 22.5607, 21.49303, 18.539, 21.55391

From the weekly chart time frame, we can see that the USDMXN was in consolidation for weeks before a breakout below the 24.0000 levels brought in the bears to take over the market. 

At the time of this report, the bears are trying to close below the 21.55391 support level. Should it happens that way, we may see the bearish trend continue towards the support zone of 17 February 2020 (18.553999).

An oversold zone from the stochastic indicator does not mean an immediate long position without a confirmation of the upside’s price action. The US binary options traders should get a clear bias from the trading platform before placing an order.

USDMXN Mid-Term Projections: Bearish 

Daily Time Frame:

Daily Resistance Levels: 23.19320, 23.64406, 22.93318

Daily Support Levels: 21.47879, 21.72288

The current level where the price is once acted as support pushing the price of USDMXN pair up, and the price is at that zone again.

 Can the support level reject the bear’s advancement or give way to the bearish run? 

If the bears succeed to close below the support level, we shall experience a significant drop in the coming days, but if we get rejections of candles and a strong bullish candle, it will take the price of USDMXN higher to the 21.94444 levels.

4Hour Time Frame

4Hour Resistance Levels: 23.09520, 22.59429, 23.06060, 22.53050,   23.22937

4Hour Support Levels: 22.14420, 222.41424, 21.43810, 21.89300, 2.30270, 22.36870,

From the four-hour time frame, we can see that the trend is bearish with lower highs and lower lows as the price keeps the support levels into resistance.

We can see the price consolidating within the support zone of 21.5647 and the resistance zone of 21.66800 at the time of the report.

A close above the 21.66800 level will expose the 21.89300, which will act as resistance, while a close below the 21.5647 support will mean another bearish trend.

Bullish Scenario:

A bullish scenario on the daily time frame may come to play if the support zones can reject the bears run at the 09 June 2020 (21.54905) support level for an upward surge.

Bearish Scenario:

From the past weeks, we can see that its’ been a bearish scenario from the weekly time frame, and any possible close below the support level (21.55391) on the weekly time frame will lead to the continuation of the trend.

Conclusion

The Weak U.S. dollar has given the Mexican peso an advantage in the market as the emerging economy continues to recover from the coronavirus pandemic.

because of the bearish run, and a close below the support will take the price lower, but a failure to close below will change the direction bullish.

James is based in London ( United Kingdom )
He has been a professional trader for over 5 years.
Currently, he works as forex analyst for different investment companies, and also the main author at USBinaryOptions.com
James S. Martin

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