Last Updated on October 26, 2020
USDMXN Outlook & Technical Analysis
The Mexican peso had gained strength against the US dollar over some period amid the coronavirus pandemic. It will interest the RaceOption broker to see how the USDMXN pair reacts as the US election gets closer.
Amid the coronavirus pandemic, we saw how the Mexican economy has been on a gradual recovery process when the lockdown law was lifted and the gradual reopening of businesses and companies even in non-essential economy activities.
The percentage of unemployed applicants dropped in the labour force from 5.4 to 5.2, as in the August report. However, the general unemployment rate percent is around 3.7 due to a decline in Mexico’s auto export, which dropped to 13.1% compared to the report of September 2019, having declined by 8.6% as of last month amid the coronavirus pandemic.
U.S. New Home Sales
Forecast 810K while Previous is 840K
This is a weekly report gotten from labour; it shows the number of individuals who officially filed for unemployment claims during the previous week.
This outcome has significant importance with consumers spending because it is also a good indicator for the brokers and investors to access the health of the economy. At the same time, the country’s monetary policy considers unemployment as a significant factor.
When the data released is lower than the forecast, it is good for the currency, while a higher reading than the forecast is not suitable for the US dollar.
USDMXN Long-term Direction: Bearish
USDMXN: Technical Analysis
The pin bar on the monthly chart showed that the bears are in control of the USD vs. Mexican Peso, having rejected the bulls’ advancement at the 25.77820 levels for a bear bias.
The low of last month (20.83770) is under threat as we can see the bearish move of the new month so forceful. A close below the low will mean that the 19.6848 levels will be reached.
However, the current support level may repel price should the level becomes a strong zone for the buyers to take over the market.
Weekly Resistance Levels: 25.78360, 24.88850, 22.89823
Weekly Support Levels: 18.53999, 19.00, 20.00, 21.49303
The weekly outlook shows a bearish swing and indicates that we have few buyers in the market while the sellers have the control.
A close below the June 2020 (21.49303) support will take the price down to 18.53999 as long as the high of 06 July 2020 (22.89823) is not breached.
The above indicator shows that price is in the oversold region, which may attract buyers to take a long position within that price zone. The traders should get actual confirmation because the price can still drop lower, while the indicator shows that price is at an oversold zone.
USDMXN Mid-Term Projections: Bearish
Daily Time Frame
Daily Resistance Levels: 22.15105, 22.31750, 22.54080, 22.69940, 22.93403, 23.22937
Daily Support Levels: 21.1213, 20.84844
From our previous reports, we saw the bullish rally towards the resistance zones of 22.93403 that rejected the bull’s surge and broke down all the support it made in August and September. At the time of the report, you can see the bearish swing heading towards the previous support of 21.12130.
However, you can see a sign of the buyers trying to push back the zone’s price. We shall wait to confirm the double bottom or any other reversal pattern before taking a long position.
4Hour Time Frame
4Hour Resistance Levels: 22.68080, 21.94362, 21.49691
4Hour Support Levels: 20.84456, 21.16794
We can see that on the H4 time-frame, the trend had been bearish, having engulfed the bullish candles from the 22.68080 levels to go short since the trend had been bearish and the price target is 20.84456.
If the bulls can get the momentum, we may see the bulls push higher for the bearish trend to stop. We need to see the USDMXN pair close above the 21.49691 levels and above.
A possible bullish scenario based on the H4 time frame may occur since we have our indicator showing the price is in an oversold level for a swing high. The support level of 21.16794 will likely be a springboard for an upward move.
A bearish scenario had been in place based on weekly and daily time frames. We expect the trend to continue should they close below the weekly support of 21.49303 to continue the selling bias.
The US dollar is still weak across the board, and the presidential election is another factor affecting the currency. The outcome of the election will give the currency a new face when the winner is known.
When the bearish trend is more dominant, we may get a pullback before another bearish swing looking at the four-hour chart.