Struggles near two-week low, seems vulnerable below 61.8% Fibo.

• USD/MXN edges lower for the seventh straight day and touches over a two-week low on Monday.
• Acceptance below the 61.8% Fibo. and negative oscillators support prospects for further downfall.
• A sustained move beyond the 17.20-25 confluence hurdle is needed to negative the bearish outlook.

The USD/MXN pair remains depressed for the seventh straight day and slides to over a two-week low, around the 17.0485 level during the Asian session on Monday.

From a technical perspective, acceptance below the 61.8% Fibonacci retracement level of the rally from the August monthly swing low might have already set the stage for a further depreciating move for spot prices. The negative outlook is reinforced by the fact that oscillators on the daily chart have just started drifting into bearish territory. This, in turn, suggests that the path of least resistance for the USD/MXN pair is to the downside.

That said, it will still be prudent to wait for a convincing break below the 50-day Simple Moving Average (SMA), currently pegged around the 17.0270 area, before placing fresh bearish bets. The USD/MXN pair might then turn vulnerable to weaken further below the 17.0000 psychological mark, towards testing the next relevant support near the 16.8885 area before dropping to the multi-year trough, near the 16.6945 region touched in August.

On the flip side, any meaningful recovery might now confront stiff resistance and is more likely to remain capped near the 17.2060-17.2280 confluence, comprising the 50% Fibo. level and the 100-day SMA. Some follow-through buying, however, should lift the USD/MXN pair to the 38.2% Fibo. level, around the 17.3300 region en route to the 23.6% Fibo. barrier near the 17.4775 area and the multi-month top, around the 17.7090-17.7095 zone.

USD/MXN daily chart

Technical levels to watch