USDMXN – Weekly Outlook- April 3 2020

Last Updated on October 8, 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

Last week, the Mexican Peso recovered some of its losses against the US Dollar, following a sharp decline in the USD Index. Towards the end of the week, the USDMXN slowly showed that what appeared as gains, happens to be a mere correction of the bullish trend.

In this week’s post, we’ll proceed to identify critical technical levels, chart patterns, and macroeconomic indicators that are driving the exchange rate of the USDMXN for binary options.

Mexico Consumer Price Index (CPI)

Mexican CPI represents an integral part of understanding the differences in purchasing trends and inflation in the nation. 

It appraises the variations in the prices spent by consumers for a measure of goods and services. The index considers the consumer’s perspective.

A higher than anticipated reading should be taken as a positive sentiment for the Peso, while a reading less than expected is seen as negative for the currency.

Most recent data points to a bearish sentiment for the MXN as the forecast figure of the latest release reads 3.56%, and the previous reading is 3.24%, while actual reading is 3.70%.

U.S. Pending Home Sales

The Home Sales Report is an evaluation of variations in the number of family homes under an agreement to be patronized, however still expecting the closing transaction. The study omits fresh construction.

A greater than anticipated reading points to greater optimism in the construction sector and should be taken as a positive sentiment for the U.S. dollar. In contrast, a reading less than expected speaks of negative for the currency.

Most recent data points to a bearish sentiment for the USD as the forecast figure of the latest data read 2.2%, while the previous reading was -4.3%, and the actual reading is 5.2%.

USDMXN Technical Analysis

USDMXN Long-term Direction: Bullish Breakout

Monthly Chart

USDMXN Outlook - Monthly Chart - April 3 2020

Following our signature top-down analysis, the USD vs. MXN breaks out of an extended range that lasts for about thirty-seven months, setting a new all-time high on 02 March ’20.

The price surge was initially triggered by a sudden burst of price above the 01 January ’20 resistance (19.02762) for a price increase of about 29.81% from the resistance established by an accumulation of sellers.

Weekly Chart

USDMXN Outlook - Weekly Chart - April 3 2020

Taking one step lower to the weekly time frame, the USD vs. Mexican Peso entered into the overbought area and started a slowing of the price hike.

Expect a continuation of the bullish swing if the stochastic oscillator does not cross below the stochastic level-80. On the flip side, the current 25.45098 all-time high may serve as resistance to further price advancement, and consequently restoring strength to the Mexican Peso. 

USDMXN Mid-Term Projections: Strong Bullish Thrust 

Daily Time Frame

After a 31.48% rise in the exchange rate of the USDMXN by an accumulation of buy orders on 04 March ’20, the USDMXN exited the overbought area and started a buildup of hidden bullish divergence pattern as the sub-window indicator sets a lower trough.

A golden cross of the stochastic indicator is slowly coming up at press time, a confirmation to get ready to perhaps scale into a bullish trend as the USD Index flags a bullish divergence.

4Hour Time Frame

After the USDMXN exchange rate increased by 31.48% by an accumulation of buy orders on 04 March ’20, the pair exited the overbought area and started a buildup of hidden bullish divergence pattern as the oscillator sets a lower valley.

A golden cross of the stochastic indicator is slowly coming up at press time, a confirmation to get ready to perhaps scale into a bullish trend as the USD Index flags a bullish divergence.

Conclusion

The world reserve currency (US dollar) still serves as a haven against uncertainties that comes with the coronavirus outbreak, as traders and investors around the globe would rather have their funds saved till the market crash slows down.

With that said, we maintain a bullish outlook on the USDMXN going forward into the week.

 

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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