USDMXN is in a strong breakdown for the last few months if not years, with recent extensions down to 16.30 after a nice breakdown through the trendline support.

We see some nice and extended drop as Bank of Mexico moved rates significantly higher over the last few months, up to 11%, much more compared to US, which explains why USDMXN is in a down trend.

Well, today MXN CPI came out less than expected, at 4.42% vs 4.5% forecast, so possibly this can allow USDMXN to see some short-term rebound before the market makes further declines.

Looking at the 4h chart, we see nice five waves down within extended wave III, so more weakness will definitely be expected after any rise. Nice resistance would be at  16.50 then 16.70.

Speculation for FED cuts this year can keep this pair in downtrend. US CPI is out tomorrow.


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