USD/MXN Review: MXN bid on news that NAFTA agreement is near

• Mexican Peso (MXN) ran into bids on reports the US and Mexico are hours away from NAFTA agreement.
• USD/MXN has charted a bull flag pattern –  a bullish continuation pattern.

Mexican Peso (MXN) picked up a bid in early Asia, possibly due to reports that the US and Mexican trade negotiators are "hours" away from resolving North American Free Trade Agreement (NAFTA) differences.

At press time, USD/MXN is up 0.63 percent at 18.72. Indeed, the pair is on the defensive but is yet to find acceptance below Friday's low of 18.77.

Mexico's Economy Minister Ildefonso Guajardo said on Sunday evening that bilateral negotiations with the US over the future of the NAFTA are advancing and the talks would continue on Monday.

The USD/MXN will likely suffer a deeper drop if the talks conclude on a positive note.

Technically speaking, the pair seems to have bottomed out at 18.41 and could rise sharply if the resistance at 19.00 is convincing breached.

4-hour chart

The pair has charted a bull flag pattern, as seen in the 4-hour chart above. A break above 19.00 (flag resistance) would confirm a bull flag breakout and would open the doors to 20.00.

Resistance

R1: 18.83 (100-hour MA)

R2: 18.94 (50-hour MA)

R3: 19.00 (flag hurdle)

Support

S1: 18.75 (July 12 low)

S2: 18.62 (flag support)

S3: 18.40 (Aug. 7 low)