The USD/MXN trading pair appears to be struggling to uphold any meaningful gains as it trades near its multi-year lows. For now, the USD/MXN is stuck in a narrow trading range between 17.30 to 17.25, with a high chance of breaking lower in the event of no buying interest.
If we look at the past three weeks, it becomes clear that buying momentum is very weak in the USD/MXN, which suggests even more downside.
USD/MXN: RSI Reaches Oversold Territory
From a technical perspective, the USD/MXN is going down on a bearish channel starting from the 18.00 price level. This establishes the presence of a bearish trend over the short term, pointing towards an even deeper correction.
However, the RSI on the USD/MXN daily chart has entered into the oversold territory, which means caution is needed. but we all know that RSI can stay at extremes for extended periods of time, and thus it is unwise to solely rely on its signal without any price action confirmation.
That's why the best-case scenario is to wait for consolidation in the near-term or at least a recovery before the resumption of the bearish trend.
For now, the USD/MXN appears to be all ready to challenge the support present at 17.15, followed by the support at 17.00. And if the 17.00 support breaks, it will lead to further losses for the USD.
On the other hand, any attempt to break higher by the USD bulls will be met by resistance in the mid-17.00s, which also happens to be the top side of the bearish channel. However, any attempt to break the upper half of the channel will lead to short-covering and thus may push the USD/MXN to the 17.70 price level.
After that, the next possible move for the USD/MXN will be the resistance located at 18.00. In that case, the 18.00 level will act as a pivot point, thus dictating the next direction for the USD/MXN pair.