USD/MXN: Defence of 17.00 can spur rebound – SocGen

The recovery in the Peso stalled at 17.00. Economists at Société Générale analyze USD/MXN outlook.

Risk of a deeper downtrend only if July low at 16.60 gets violated

USD/MXN has so far carved out a higher trough near 17.00 as compared to the one in July near 16.60. It has gradually established above the 50-DMA denoting receding downward momentum. This is also highlighted by daily MACD which has crossed above equilibrium line. 

Defence of 17.00 could result in a short-term bounce towards 17.42 and recent pivot high at 17.64/17.70 which is also a multi-month descending trend line. This is a crucial resistance.  

Only if July low at 16.60 gets violated would there be risk of a deeper downtrend.