USD/MXN has lost 12.0% of its value after reaching a one-and-a-half-year high of 20.9544 in mid-June. The pair is currently trading not far above the three-and-a-half-month low of 18.3993 hit on Tuesday.
The RSI, which is in bearish territory below 50, is projecting a negative short-term picture for the pair. Notice though that the indicator is not steeply negatively-sloped at the moment – a sign that bearish momentum has eased somewhat – as well as that it is close to the 30 oversold level; oversold conditions may render a near-term reversal more likely.
Additional declines may meet immediate support around the lower Bollinger band at 18.3468, with the area around it also encapsulating yesterday’s low of 18.3993. Further below, the 10-month low of 17.9347 recorded around mid-April would increasingly come into scope.
A reversal to the upside may meet resistance around the middle Bollinger line – a 20-day moving average line – at 18.7198. Meanwhile, steeper gains would turn the attention to the upper Bollinger band at 19.0937, with the current level of the 100-day MA lying not far above at 19.1831.
In terms of the medium-term picture, it is looking predominantly bearish with price action taking place below the 50- and 100-day MA lines.
Overall, both the short- and medium-term outlooks are looking negative. For perspective, USD/MXN has retreated by 6.1% in the year-to-date.
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