Mexican Peso hits two-week high, Double top reversal on USD/MXN

Finally some respite is in the offing for the Mexican Peso… a currency popularly known as the ‘Trump Thermometer’.

USD/MXN dropped to two-week low (Peso hit two-week high) 21.4151 this Monday morning. Note that Trump has not softened his stance with respect to Mexico, still the pair dropped in Asia on account of the broad based USD-sell-off.

Moreover, the unwinding of the Trump trade has gathered pace following Trump’s inauguration speech. ‘Sell the fact’ trade and market pricing-in the risks associated with Trump Presidency is weighing over the US dollar.

The US data docket is thin; hence the spot remains at the mercy of Trump related news flow and the resulting action in the treasury yields.

USD/MXN Double Top Reversal pattern

The pair has breached the neckline level of 21.4611. The next major support is seen at 20.20 (Jan 6 low), under which the losses could be extended to 20.8387 (50-DMA). On the other hand, a break above 21.4611 (former neckline support, now resistance) could yield a re-test the recent highs around 22.03 (double top level). Only a daily close above 22.03 would signal the continuation of the Trump rally.