USD/MXN Price Analysis: Mexican peso recovers, still looks bearish

• USD/MXN drops for the second day in a row, approaches short-term support.
• Technical indicators favor the Mexican peso, but cross remains above key level.

Market optimism continues to keep the upside limited in USD/MXN. The pair peaked at 20.45 two weeks ago and then it moved in a range between 20.17 and 20.42. On Monday it is testing level under 20.17 and holding above the 200-day simple moving average.

A slide below 20.15 would likely lead to a test of 20.05, the convergence of the 20-day and 55-day SMAs. A daily close below should strengthen the Mexican peso. The next support is an uptrend line at 19.87.

If USD/MXN rebounds back above 20.20 it would likely continue to trade sideways in the range 20.17/20.42. A daily close clearly above 20.40 should expose the next resistance at 20.55.

Technical indicators show momentum and RSI favoring the Mexican peso in the short-term. Still the trends point to the upside. Signs indicate that for the time being, USD/MXN remains unable to move significantly away from 20.00.

USD/MXN daily chart