USD/MXN testing key support – Rabobank

By FXStreet FXStreet (Córdoba) – According to Christian Lawrence, analyst at Rabobank, USD/MXN is at a critical level as it languished around 16.36; a confirmation below would open the doors for a potential decline to 15.40.

Key Quotes:

“USD/MXN is at a critical juncture as the pair languishes around 16.36. This support level represents the neckline of the double top pattern formed in the second half of this year. By using the distance between the neckline and the peak we can infer a downside target of 15.40 should we see a confirmed break of said neckline.”

“We fully expect the China/commodity story, as well as domestic issues in the LatAm region, to resurface and push USD/LatAm crosses higher again. For Mexico, this fundamental theme shouldn’t be as damaging as it is for the rest of LatAm given that Mexico is more closely linked to the US business cycle than the commodity cycle despite Mexico’s revenues still heavily reliant on oil income. But MXN will still suffer.”

“We see significant risk of USD/MXN breaking back above 17 before year-end in contrast to the technical picture. That being said, we do think that a stress driven move north of 17 in USD/MXN is likely to …read more

Source:: FX Street