USDMXN – Weekly Outlook- March 6 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

The USDMXN begins correction of last week’s 5.25% price surge on Binary Cent broker terminal as the USD Index closed bearish.

This week, however, the USD Index shows signs of a bullish come back, and we may see a continuation of the upbeat campaign.

Read on as we reveal the crucial technical levels and touch on significant fundamental events driving the USDMXN.

Mexico Consumer Price Index (CPI) MoM

The Consumer Price Index (CPI), which is one of the significant indicators of evaluating change in inflation and purchasing sentiment is an indicator that measures the difference in the price of goods and services from the consumer’s perspective.

A lower than expected data reading is considered a bearish move for the currency, whereas a higher than expected reading is seen as a positive move for the currency.

Traders can anticipate a bearish sentiment for the Peso as the most recent data released February 07 shows that the actual reading is 0.48%, while the previous reading is 0.56%, and the forecast reading is 0.50%.

U.S. ADP Nonfarm Employment Change

The ADP National Employment Index is an evaluation of any change in non-farm, private employment, measured monthly. The report is based on the salary data of roughly 400,000 U.S business customers.

A lower than expected data reading is considered a bearish move for the currency, whereas a higher than expected reading is seen as a positive move for the currency.

Traders can anticipate a bearish sentiment for the U.S. dollar as the most recent data released February 05 shows that the actual reading is 291K, while the previous reading is 199K, and the forecast reading is 156K.

USDMXN Technical Analysis

USDMXN Long-term Direction: Bullish Correcting

Monthly Chart

USDMNX Outlook - Monthly Chart - May 5 2020

The ongoing war against the coronavirus brings some sharp twists into the markets, as the USDMXN finds resistance at 19.89508 in February, leading to a correction in USD gains.

After a bullish price surge, triggering an engulfing candlestick pattern at the close of February, the USDMXN starts to correct the gains by about 50% of the rise.

We hold on to a bullish bias on the USDMXN, considering that the pair broke above a bearish resistance (19.02762) on 01 Jan 2020. 

The 01 Dec 2016, 01 Nov 2018, and 01 Jun 2018 resistance levels are considered our significant price objectives for the current mid-term bullish trend.

Weekly Chart

USDMNX Outlook - Weekly Chart - May 5 2020

Upon exiting the oversold area on 17 Feb ’20 in combination with a bullish engulfing pattern, the Mexican Peso assumes strength after the pair hits the 25 Nov 2019 resistance (19.6594).

The bulls now eye the 20.25739 resistance as a critical price target as the USDMXN heads for the overbought area.

USDMXN Mid-Term Projections: Bullish Thrust Correction 

Daily Time Frame

After finding support at 18.52376 on 17 Feb 2020, an increase in buying power forced the USDMXN above the descending trend line and consequently signaling an accumulation of buy orders on 24 Feb 2020, where the pair completed a 7.4% price increase from the support.

The 28 Nov 2019 resistance (19.65940) held back the pair from attaining farther highs and finally led to a correction of the gains.

H4 Time Frame

The USDMXN from a 4hr time frame exits the overbought area after staying in the zone for about four days.

After entering the oversold area on 02 Mar 2020 21:00, the pair quickly exits the area the following day and signals a regular bullish divergence at publication time to continue the bullish trend. 

The USDMXN shows a high probability of hitting the 19.89508 price target going forward.

Conclusion

The USDMXN corrects the February gains, as anticipated in our last post. However, we look forward to a continuation of the bullish price surge following the bullish divergence setup signaled on the 4hour time frame.

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