USD/MXN Price Analysis: Flirts with 100-day SMA support, below 38.2% Fibo. level

• USD/MXN stalls its retracement slide from a multi-month top near the 100-day SMA support.
• Positive oscillators on the daily chart warrant caution before placing aggressive bearish bets.
• Strength back above the 38.2% Fibo. level will set the stage for a further appreciating move.

The USD/MXN pair finds some support near the 100-day Simple Moving Average (SMA), currently around the 17.25 region, and for now, seems to have stalled its retracement slide from over a three-month peak touched last week. Spot prices, however, struggle to register any meaningful recovery and remain below the 17.30 level through the Asian session.

From a technical perspective, the overnight sustained break and acceptance below the 38.2% Fibonacci retracement level of the recent rally from the August monthly swing low favours bearish traders. That said, oscillators on the daily chart –though have been easing from higher levels – are still holding in the positive territory. This, in turn, warrants some caution before positioning for any further depreciating move.

A convincing break below the 100-day SMA, however, might prompt some technical selling and expose the 50% Fibo. level, around the 17.20 level. The subsequent fall has the potential to drag the USD/MXN pair towards the 17.10 region, or the 61.8% Fibo. level. The latter should act as a key pivotal point, which if broken decisively could make spot prices vulnerable to extend the decline further below the 17.00 mark.

On the flip side, the 38.2% Fibo. level, around the 17.35 region, is likely to cap the immediate upside, above which the USD/MXN pair could climb to the 17.45-17.50 hurdle, or the 23.6% Fibo. level. This is followed by the multi-month top, around the 17.70 zone, which if cleared decisively will set the stage for the resumption of the recent strong appreciating move witnessed over the past two weeks or so.

USD/MXN daily chart

Technical levels to watch