USDMXN – Weekly Outlook- January 2 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

The first day of the year is generally a holiday on all trading platforms like Race Option. As some traders closed the year in positive, so did others close in negative, considering that the forex market is a zero-sum game. 

One FX pair popular among traders, mainly owing to its volatility, is the USDMXN. This week, we’ll analyze the technical events that brought the pair to the closing price of 18.93881 and some essential macro-economic drivers of the pair.

Mexico Retail Sales MoM

Retail Sales is the measure of any changes in the total value of inflation-adjusted sales at the retail level. 

A higher than expected reading points to more consumer spending and should be interpreted as a positive or bullish outlook for the MXN. In contrast, a lower than expected text is interpreted as a negative or bearish sentiment for the currency.

Traders can expect a bearish outlook for the MXN based on latest data which reads thus; 

Actual reading: -2.3%, and previous reading: 0.9%.

U.S. Conference Board (CB) Consumer Confidence

The United States CB Consumer Confidence index is a measure of the level of confidence consumers have in economic activity.  

A higher than expected reading points to consumer optimism and should be interpreted as positive or bullish for the USD. In contrast, a lower than anticipated text is interpreted as a negative or bearish sentiment for the currency.

Traders can expect a positive outlook for the USD based on latest data which reads thus; 

Actual reading: 126.5, forecast reading: 128.2, and previous reading: 126.8.

USDMXN Long term Overview: Bullish Correction

USDMXN – Technical Analysis

Monthly Chart

USDMXN Analysis - Monthly Chart - January 2 2020

At the closing month of the year 2019, the Mexican peso couldn’t close below the significant 18.86446 support that was established on July 01, 2019. However, the price breakdown of the November 2019 bullish inside-bar support hints on the bearish presence and the possibility of seeing new lows in the New Year 2020.

Let’s not forget to mention that the dollar to pesos trades within the MA-50 support zone, and there are slight chances of a price recoil.

Weekly Chart

USDMNX Analysis - Weekly Chart - January 2 2020

The USDMXN trades below the 50 weekly and 200 weekly Moving Averages, indicating a huge sell off and a collapse of crucial support levels.

If the price should recoil towards the upside and hits the MA-50, we expect the Moving Average to serve as a resistance for a bearish trend continuation.

USDMXN Medium Term Projections: Bearish 

Daily Time Frame

We notice a regular bullish divergence setup upon attaching the stochastic oscillator to the daily time frame of the USDMXN. 

December 31, 2019, closed bullish, establishing a significant support level at 18.84140. A price close below this level should confirm a continuation of the bearish trend. However, failure to close below the level would imply an increase in demand for the Greenback.

Conclusion

With the last week of 2019 and the first week of 2020 overlapping, the USDMXN shows a possibility of closing bullish for the week, with support from the daily time frame. However, the general outlook of the pair remains bearish.

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