USD/MXN Price Analysis: Mexican peso approaches monthly highs, back near critical support

• The Mexican peso rises for the fourth consecutive day on Tuesday versus the US dollar.
• USD/MXN is approaching oversold readings but has no significant signs of consolidation.
• Bearish bias prevails, a daily close under 19.80 is likely to trigger more losses.

The USD/MXN moved further to the downside on Tuesday and hit weekly lows at 19.77 before rising back above 19.80. A daily close below should point to further weakness in the pair.

The RSI Index in is oversold territory in the four-hour chart. In the daily chart, however, the index still shows some room for further losses before reaching 70. The Mexican peso needs to make a clear break from the 19.80 area.

The next strong support area might be seen at 19.70, followed by 19.60. The area at 19.50/55 should cap the downside if reached in the next sessions, favouring a rebound, initially to 19.70.

On the upside, at 19.97/20.00 is the immediate resistance. Above the next level stands at 20.10 (20-day Simple Moving Average). A recovery above 20.20 should negate the bearish bias in the short term, adding support to the US dollar for a more significant recovery.  

USD/MXN daily chart