USD/MXN Price Analysis: Consolidates around 20.70 ahead of FOMC decision

• The Mexican peso consolidates near the 100-day moving average (DMA), pre FOMC.
• Global equity indices reflect the positive market sentiment.
• USD/MXN Price Forecast: Upward biased, but would depend on the Federal Reserve decision.

The Mexican peso is strengthening for the second straight day in the week, after a significant depreciation in the last week, where the USD/MXN reached a YTD high at 21.4679, on a flight to safe-haven assets, courtesy of the conflict between Russia-Ukraine. At the time of writing, the USD/MXN is trading at 20.70, down 0.59% ahead of the FOMC meeting.

 A positive market mood surrounds the financial markets. The European and US equity indices are rallying, while the Mexican bourse rises 1.06% in the session.

USD/MXN Price Forecast: Technical outlook

Overnight, the USD/MXN slid from daily highs near 20.8525 to 20.6545 lows, on goodish US economic data, with the US Retail Sales moderating its pace in February, though fell short of forecasts. However, around 18:00 GMT, the Federal Reserve would unveil its monetary policy, an event that could cause violent swings in the USD/MXN exchange rate.

Daily chart

From a technical perspective, the USD/MXN aims upward, as depicted by the daily chart, with all daily moving averages (DMAs) sitting below the exchange rate. However, in the near term, the 1-hour chart shows the pair consolidated in the 20.80-21.05 area, and worth noting the simple moving averages (SMAs) reside above the spot price, which would be tested in the event of a hawkish than expected Federal Reserve.

Hourly chart

Upwards, the USD/MXN first resistance would be March 2 high at 20.7981. Breach of it would expose the 50 and 100-hour SMA at 20.84 and 20.8885, respectively. Once cleared, the next ceiling level would be the confluence of the 200-hour SMA and the 21.0000 figure.

Downwards, the USD/MXN first support would be 20.7000. A decisive break would expose 20.5783 March 2 low, followed by the 50-day moving average (DMA) at 20.5668 and the 200-DMA at 20.4060.