• On Monday, USD/MXN struggles to establish traction and oscillates in a range.
  • The technical setup favors some considerable upside amid a bullish USD.
  • A breach below last week’s swing low will return the tilt to bearish traders.

The USD/MXN pair holds the 100-day Simple Moving Average (SMA) support through the Asian session on Monday, albeit with little traction. Spot prices are still trading below the 17.2500 level, or last week’s swing high, which should now serve as a critical marker for short-term traders.

With technical indications on the daily chart remaining favorable, persistent gains should pave the way for some major upside, lifting the USD/MXN pair to the 17.3810 level (September 12 peak). Some follow-through purchasing has the ability to push spot prices even higher towards the next key barrier near the 17.5910-17.5960 horizontal zone on the way to the monthly high, which is expected to be around the 17.7090-17.7095 region.

The US Dollar (USD) stays slightly below its six-month high and is strongly supported by the Federal Reserve’s (Fed) hawkish stance, signaling the need to maintain rates higher for longer in order to push inflation to the 2% target. This, together with a reduction in the predicted number of rate cuts in 2024, is pushing US bond yields higher and underpinning the USD, favoring USD/MXN bulls.

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USD/MXN Price Chart – Source: Tradingview
USD/MXN Price Chart – Source: Tradingview

As a result, any significant drop below the 100-day SMA may continue to attract new buyers near the 17.1010-17.0650 horizontal support. This, in turn, should help limit the USD/MXN pair’s downside near last week’s swing bottom, about 16.9980. which, if decisively broken, could tilt the bias in favor of bearish traders. Spot prices could then be vulnerable to a retest of the 16.6945 level, or a multi-year low reached in August.


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