USD/MXN Price Analysis: Finds cushion below 18.00 amid a recovery in USD Index

• USD/MXN has managed to recapture the critical resistance of 18.00 amid a recovery in the US Dollar.
• S&P500 futures have extended their losses as investors are cautious ahead of quarterly results from giant technology stocks.
• USD/MXN is auctioning in a Descending Triangle chart pattern, which indicates a volatility contraction.

The USD/MXN pair has extended its recovery above the potential resistance of 18.00 in the Asian session. A recovery attempt by the US Dollar Index (DXY) after a nosedive move has infused some strength in the major. The USD Index has rebounded after printing a fresh weekly low of 101.20. The USD Index still needs to fulfill a lot of filters to prove a reversal.

S&P500 futures have extended their losses in the Asian session as investors are cautious ahead of quarterly results from giant technology stocks. The demand for US government bonds has increased as the Federal Reserve (Fed) is expected to deliver a neutral interest rate guidance after a 25 basis point (bp) interest rate hike.

USD/MXN is auctioning in a Descending Triangle chart pattern on a two-hour scale, which indicates a volatility contraction. The downward-sloping trendline of the aforementioned chart pattern is plotted from April 05 high at 18.40 while the horizontal support is placed from April 03 low at 17.96. The 20-period Exponential Moving Average (EMA) at 18.00 is overlapping the asset, indicating a sideways performance.

Also, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, signaling an absence of a potential trigger.

A breakdown of April 03 low at 17.96 will drag the asset to a fresh five-year low below 26 September 2017 low at 17.88 followed by 25 September 2017 low at 17.72.

On the flip side, a break above April 19 high at 18.15 will drive the asset toward April 05 high at 18.40 and March 14 low at 18.55.

USD/MXN two-hour chart