100 day MA and 50% retracement being tested
The USDMXN fell sharply on Friday after US Commerce Secretary Wilbur Ross said: "I believe that if we and the Mexicans make a very sensible trade agreement, the Mexican peso will recover quite a lot."
That sent the USDMXN down to the 200 day MA - currently at 19.54714. The 50% of the move up from the April 29th low comes in at 19.5385 (see chart above). The pair is trading above those areas after dipping below on both Friday and again today, but finding support near 19.44 level. The area between 19.44 and 19.54 is key support for the USDMXN.
Anyway, with the USDMXN recovered to the 200 day MA and the 50%, what is Ross saying about the price having a lot of room to roam if the US and Mexico make a sensible trade agreement? The currency has already recovered quite a lot.
Well if you zoom out and look at the weekly chart, the pair based at the 100 and 200 week MAs in May/July 2015 at the 12.82 area. The April 2016 low is just the recent swing high. The 2014 lows are a long way away.
So if Ross is correct in his assessment of the MXN pesos potential, and more importantly, iff the technicals support lower levels on a move below the 19.44 level, there is indeed a lot of room to room given the BIGGER picture in the pair.
