USD/MXN Price Analysis: Gains momentum for four straight days above the 17.20 mark, US data eyed

• USD/MXN gains traction for the fourth consecutive day on Tuesday.
• The immediate resistance level is located at the 17.30-17.35 region; the initial support is seen at the 17.00-17.05 zone.
• Relative Strength Index (RSI) stands above 50, within bullish territory.

The Mexican Peso (MXN) extends its downside against the US Dollar (USD) during the early European session on Tuesday as the Bank of Mexico will reduce its currency hedging program to tame volatility in the market. USD/MXN currently trades near 17.25, gaining 0.45% on the day.

According to the daily chart, USD/MXN holds below the key 100-day Exponential Moving Average (EMA) which means further downside looks favorable. Therefore, the pair could meet the immediate resistance level of the 17.30-17.35 region, representing the upper boundary of the Bollinger Band and the 100-day EMA. The additional upside filter to watch is near a psychological round mark and a high of May 24 at 18.00. Further north, the next barrier is seen at 18.20 (a high of April 27) and finally at 18.40 (a high of April 5).

On the flip side, the initial support level is located at the 17.00-17.05 region. The mentioned level is a confluence of the midline of Bollinger Band, a psychological round figure, and the 50-day EMA. Any extended weakness below the latter will challenge the critical contention at the 16.60-16.70 region, portraying the lower limit of the Bollinger Band and a Year-To-Date (YTD) low. Further south, the pair will see a drop to a psychological round figure at 16.00.

It’s worth noting that the Relative Strength Index (RSI) stands above 50, within bullish territory, suggesting that buyers will likely retain control soon.
 

USD/MXN daily chart