Mexican President Andres Manuel Lopez Obrador added more fuel to the USD/MXN rally on Wednesday by changing his nominee for the next head of the central bank. It triggered a new leg higher that peaked at 21.62, the new high since March.
From the new top, USD/MXN pulled back, finding support above 21.35. Currently, the pair is hovering around 21.50, a key area. A consolidation above should lead the road open to more gains. The next strong resistance is located at 21.90 that should hold.
Technical indicators are at extreme readings but no signs of correction are seen. The RSI is above 70 but still looking north; a similar situation occurs with Momentum. Despite showing no signs, the 21.50 zone should limit the upside for the time being, particularly if overall market conditions help.
If USD/MXN fails to hold above 21.50, it could pullback initially to 21.20 and then to the more relevant and strong support seen at 20.90. A slide below would alleviate the bullish pressure.
The constructive outlook for USD/MXN will remain intact while price stays above the uptrend line, today at 20.35.
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