Ella 
USD/MXN regained some positive momentum on Monday and broke off some of Friday’s pullback losses from around 18.0000, the highest level since March 24. However, after breaking through the 38.2% Fibonacci retracement level of July’s sharp decline, USD/MXN found it difficult to continue its upward momentum. USD/MXN is currently trading around 18.2475, still rising by more than 0.35% throughout the day.
Looking at the broader cycle, USD/MXN recently broke above the 17.8400-17.8555 confluence, where the technically key 200-day simple moving average (SMA) and the multi-month descending trendline converge, which is bullish for the bulls. That said, the relative strength indicator on the daily chart is slightly overbought, preventing bulls from launching new bets on USD/MXN.
Therefore, it would be prudent to wait for the recent consolidation or minor pullback in USD/MXN before preparing for a continuation of the uptrend established over the past month or so. Meanwhile, any consolidating decline in USD/MXN could attract fresh bulls near 18.0000. This should help stem the downside after USD/MXN breaks out near the aforementioned confluence resistance breakout (17.8555-17.8400).
The next relevant support is around the 23.6% Fibonacci level at 17.6635, and a clear move below this level would negate the bullish outlook and turn the near-term bias towards USD/MXN towards the bears. USD/MXN is likely to accelerate its decline towards the 17.4200-17.3785 horizontal support, then towards the 17.0550-17.0245 area and ultimately below the 17.0000 level.
On the upside, if USD/MXN breaks through the 38.2% Fibonacci level, it may encounter resistance near last Friday’s swing high (near 18.4935). Some follow-through buying could push USD/MXN further to the 18.7980-18.8245 area, which is the 50% Fibonacci level. If the price sustains strength beyond this level, it will be seen as a new trigger point for the bulls and open the door for further USD/MXN appreciation.
