USDMXN – Weekly Outlook- June 11 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

The road to economic recovery is a gradual process, and the government needs to see stability in the employment data and price of commodities. Since the ease of the lockdown, we can see that life is gradually returning to normal.

Leading trading brokers such as RaceOption are recording huge interest for the USDMXN on their trading platform owing to its high volatility. Let’s analyze the charts for more insights and also touch on some interesting fundamentals.

Fundamentals

Mexico GDP

The Mexican peso is among the upcoming economy, and we cannot undermine its contribution to the global economy.

However, it took a long time of persuasion for the Mexican government to agree with OPEC on the 100K barrel output cut per day after US agreement to make up the difference between that and 400K barrel OPEC wanted.

In the coming days, US inventories and the drill count will affect market participants, including the Mexican peso.

U.S. FOMC

The previous meeting of FOMC kept the benchmark rate unhung between the ranges of 0% to 0.25%, keeping it lower to ensure an eventual economic recovery. They plan to standardize the treasury that reduced from $75 billion in a day to $5 billion as the capital market normalizes.

The Fed summary of the economic projection will help investors and institutional traders make proper planning regarding future investment.

If the economic projection is more hawkish than expected, it is good for the currency, but if not, it isn’t favourable for the currency.

USDMXN Long-term Direction: Bullish and Correction Phase

USDMXN: Technical Analysis

Monthly Chart

USDMXN Outlook - Monthly Chart - June 11 2020

Monthly Resistance Levels: 22.04012, 23.20965, 25.78118

Monthly Support Levels: 17.05053, 17.45165, 17.95144, 19.02762, 20.14248

We see a sign of the Bulls’ weakness as the price has done 50% Fibonacci retracement of its initial bullish run. The correction started from the resistance zone of 25.78118 (01 April 2020).

Currently, the USDMXN is at a previous resistance level of 22.04012, which may act as a support or give way to a further push to the next zone of 20.114248.

Weekly Chart

USDMXN Outlook - Weekly Chart - June 11 2020

Weekly Resistance Levels: 24.88850, 25.78360

Weekly Support Levels: 18.53999, 19.61860, 21.49303

The regular Bullish divergence of 24 February 2020 gave rise to the bullish momentum surge for weeks before the resistance at 25.788360 held and reverses the trend on 06 April 2020.

In recent times, the hanging man and bearish accumulation resistance of 04 May 2020 put the bears in control for the past two weeks, giving us a bearish trend on the weekly chart.

USDMXN Mid-Term Projections: Bearish

Daily Time Frame

Daily Resistance Levels: 23.79250, 25.28830, 25.8830, 25.77820

Daily Support Levels: 18.5225, 19.18600, 20.29690, 21.5046

For some days, the bulls tried to take over the market at the resistance zone of 23.79250 but lost steam to the bears. The bearish accumulation of resistance on 19 May 2020 finally gave the bears control over the bulls.

The support Zone of 03 June 2020 is building up a bullish divergence. However, if it confirms the divergence, we may see the bull’s back in control.

4Hour Time Frame

4Hour Resistance Levels: 21.99040, 22.48870, 23.16480, 23.75139, 24.3777, 24.64258, 24.86228, 25.28830

4Hour Support Levels: 21.4925

The USDMXN has been on a downtrend obviously from the 14 May 2020 resistance level, the bearish engulfing candles as brought in more sellers in the market. The market has created lower highs and lower lows.

At the time of this report, the USDMXN was trying to establish support at the 21.4925. If it is to hold, we may see a double bottom candlestick pattern.

Bullish Scenario:

The bulls have lost the momentum from the monthly time frame, and the market is in a corrective stage. However, as the correction gets deeper, it might be a change of trend.

However, nothing remains certain in the market, we may have a change of direction should the current support on H4 holds, and the bulls can take price up.

Bearish Scenario:

From the weekly, daily, and H4 time frames, the bias is bearish.  As at the writing of this report, the strength of the market is to the south, and it is good for the upcoming economy of the Mexican Peso.

Conclusion

During the coronavirus pandemic heat, the Mexican Peso is among the hardest hit within the emerging economies.

As the days unfold and certain fillers will be obtained from the FOMC meetings and other data, other market participants will assess the conditions that may lead to a change of future monetary policy.

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