USD/MXN Price Analysis: Drops below the 50 and 100-DMA, as bears eye 20.5000

• The Mexican peso keeps the greenback under pressure gains the week 2.24%.
• Risk appetite increases in the session, as portrayed by global equities rising.
• USD/MXN Price Forecast: Neutral, but the path of least resistance is downwards, though facing solid support around 20.50.

The Mexican peso rallies versus the greenback during the North American session, after the first rate hike in three years by the US central bank, which appears to be ignored by USD/MXN traders, which pushed the pair from around 21.00 towards the 20.50s area. At 20.5229, the USD/MXN reflects a risk-on sentiment.

An upbeat market sentiment portrayed by global equities keeps risk-sensitive currencies bid. In the FX space, the AUD, NZD, and the CAD extend gains, followed by the high-interest rate Mexican peso, which appreciated on ebbs and flows, benefitted by the rising Mexican 10-year bond, thirty-three basis points, up at 8.861%.

Meanwhile, the US Dollar Index, a gauge of the greenback’s value against a basket of six rivals, continues its free-fall, down 0.68%, sitting at 97.728, a tailwind for the USD/MXN.

USD/MXN Price Forecast: Technical outlook

Overnight, the USD/MXN seesawed in the 20.60-70 area until the North American open, when the pair pierced under March 2 daily low at 20.5783, reaching a daily low at 20.5060.

That said, the USD/MXN bias is neutral. However, in the last two days, the pair broke below the 50 and 100-day moving averages (DMAs), shifting the bias from neutral-upwards as the spot price approaches the 200-DMA at 20.4100. The USD/MXN path of least resistance is downwards, and the Mexican peso's first support would be 20.5000. Breach of the latter would expos ethe 200-DMA at 20.4100, followed by the February 23 YTD low at 20.1558.

Upwards, the USD/MXN first resistance would be the 100-DMA at 20.5660. Once cleared, the next resistance would be the 50-DMA at 20.7019, and the 21.00 mark.