USD/MXN down 0.06% on the day; price trapped between 100-DMA and 200-DMA

Currently, USD/MXN is trading at 19.82, down marginally -0.06% or (111)-pips on the day, having posted a daily high at 19.90 and low at 19.73.

The American dollar vs. Mexican peso experienced a challenging environment last week as Banxico's initiatives build up momentum to favor the peso. However, in the next day's news releases, Trump's stimulus and Fed's Yellen could easily test and reverse those accumulated losses; as of writing near to (2.62%) in the last 6-trading sessions.

According to the latest wires, via Bloomberg, "Mexico's economy minister Ildefonso Guajardo warned that his country will break off negotiations on the North American Free Trade Agreement (NAFTA) if the United States were to propose tariffs on products from Mexico."

USD/MXN could extend downward correction towards 19.56 – Natixis

Historical data available for traders and investors indicates during the last 9-weeks that USD/MXN, a commodity-linked and exotic currency, had the best trading day at +1.83% (Jan.10) or 3983-pips, and the worst at -2.22% (Jan.25) or (4684)-pips. Furthermore, the US 10yr treasury yields have traded from 2.34% to 2.31%, up +1.00% on the day at 2.33% or +0.0231.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 20.28 (100-DMA), then at 20.86 (50-DMA) and above that at 21.37 (high Jan.27). While supports are aligned at 19.73 (low Feb.27), later at 19.47 (200-DMA) and below that at 18.93 (low Nov.4).

On the other hand, Stochastic Oscillator (5,3,3) seems to slightly turn south, but 'extreme attention' over US Treasuries to avoid a market trap. Therefore, there is evidence to expect more Mexican Peso gains in the near term.

On the medium-term view, if 22.03 (high Jan.15) is in fact, the top during the first semester in 2017, then traders and investors would have allocated risk around the following support levels: 19.46 (low Sep.18), then at 19.19 (short-term 50% Fib) and finally below that at 18.51 (short-term 38.2% Fib).

On the other hand, upside barriers are aligned at 19.87 (short-term 61.8% Fib), later at 20.54 (high Feb.12) and above that at 20.92 (high Jan.29).

The Fed is the only thing that might upstage Trump