USDMXN Bears Testing the 50-Day SMA

USDMXN trades lower for the third consecutive day after the central bank of Mexico in its May policy meeting decided to cut the interest rates by 50 basis points to 5.5% as widely expected by markets. Banxico said that headline inflation decreased from 3.25% to 2.15% in the last two months, while the economic activity in Mexico contracted significantly during the Q1. The central bank of Mexico also said that the risks are to the downside amid the coronavirus outbreak. Banxico is open to any further interest rates adjustment as it continues to monitor the coronavirus impact on the economy.

From the USA, the Michigan Consumer Sentiment Index came in at 73.7, well above the expectations of 68 in May. On the other hand, the U.S. Retail Sales came in at -16.4%, a big miss, as the expectations were for -12% in April, the Retail Sales ex Autos came in at -17.2% also below the forecasts of -8.6%. The NY Empire State Manufacturing Index dropped to -48.5 but beat the forecasts of -63.5 in May.

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USDMXN Price Analysis

USDMXN is 0.06% lower at 23.8424 as the correction of the pair from two-week highs continue. The pair tested earlier today the support at the 50-day moving average and managed to bounce at the unchanged level for the day. The technical outlook remains bullish for USDMXN despite the recent correction. A settlement today below the 50-day SMA could accelerate the correction.  

On the downside, the first support for USDMXN will be met at 23,7636 today’s low. The next support zone for the pair stands at 23.5286 the low from May 11. More bids for the pair might emerge at 23.2227 the low from April 13.  

On the contrary, the first resistance for USDMXN stands at 24.0178 the daily high. A break above might drive the price to 24.3818 the high from yesterday trading session. In case USDMXN breaks above 24.3818, then the next resistance will be met at 24.8648 the high from April 28.   

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