USD/MXN Price Analysis: Extends its downside near 17.50 amid the oversold condition

• USD/MXN remains under selling pressure on the weaker of the USD.
• The pair holds below the 50- and 100-day EMAs on the four-hour amid the oversold RSI condition.
• The immediate resistance level is seen at 17.75; 17.46 acts as an initial support level.

The USD/MXN pair extends its downside around 17.51 during the Asian session on Friday. The downtick of the pair is supported by a fall in US Treasury bond yields and a weaker US Dollar (USD). The Federal Open Market Committee (FOMC) held the interest rate steady at its November meeting on Wednesday, as widely expected. Markets are confident that the Fed is nearing the end of the hiking cycle. This, in turn, exerts some selling pressure and acts as a headwind for the pair.

From the technical perspective, USD/MXN holds below the 50- and 100-day Exponential Moving Averages (EMAs) on the four-hour chart, which means the path of the least resistance is to the downside. It’s worth noting that the Relative Strength Index (RSI) stands in a bearish territory below 50. However, the oversold condition indicates that further consolidation cannot be ruled out before positioning for any near-term USD/MXN depreciation.

That being said, the pair could meet the immediate resistance level at 17.75 (low of October 12). The key upside barrier is seen at 18.00. The mentioned level is the confluence of the 100-hour EMA and a psychological mark. The additional upside filter to watch is near the upper boundary of Bollinger Band at 18.27. Further north, the next barrier is located at a high of October 19 at 18.40

On the downside, any decisive follow-through selling below the lower limit of the Bollinger Band at 17.46 will see a drop to a low of September 29 at 17.35. The next contention will emerge at 17.00, representing a round figure and a low of September 20.

USD/MXN four-hour chart