USD/MXN up 0.91% on the day; dollar bulls roaring towards 100-DMA

Currently, USD/MXN is trading at 20.09, +0.91% or 1829-pips on the day, having posted a daily high at 20.09 and low at 19.85.

'Light at the end of the tunnel' that's exactly how the American dollar vs. Mexican peso walked during the last 2-consecutive trading sessions after an last's week overwhelming battle where the exotic clocked (2.62%) in losses. Furthermore, US data via Consumer Confidence lifted the greenback from the 19.85 low as the 114.8 figure was 'better than expected.'

Furthermore, the USD/MXN exotic could not be considered out of troubles as the uncertainty keeps knocking its exchange rate without doubts due to NAFTA and higher levels of political uncertainty generated via the new US administration. Hence, dollar bulls have experienced a decent recovery that seems vulnerable unless such receives further confirmation from treasuries yields or Trump's rhetoric.

DXY inter-markets: not so ‘phenomenal’

Historical data available for traders and investors indicates during the last 9-weeks that USD/MXN, a commodity-linked and exotic currency, had the best trading day at +1.83% (Jan.10) or 3983-pips, and the worst at -2.22% (Jan.25) or (4684)-pips. Furthermore, the US 10yr treasury yields have traded from 2.37% to 2.33%, down -0.53% on the day at 2.35% or -0.0125.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 20.28 (100-DMA), then at 20.86 (50-DMA) and above that at 21.37 (high Jan.27). While supports are aligned at 19.73 (low Feb.27), later at 19.47 (200-DMA) and below that at 18.93 (low Nov.4).

On the other hand, Stochastic Oscillator (5,3,3) seems to head north, but 'extreme attention' over US Treasuries to avoid a market trap. Therefore, there is evidence to expect more Mexican Peso losses in the near term.

On the medium-term view, if 22.03 (high Jan.15) is in fact, the top during the first semester in 2017, then traders and investors would have allocated risk around the following support levels: 19.72 (low Feb.26), then at 19.46 (low Sep.18), and finally below that at 19.19 (short-term 50% Fib).

On the other hand, upside barriers are aligned at 19.87 (short-term 61.8% Fib), later at 20.20 (low Feb.12) and above that at 20.54 (high Feb.12).

How much longer can the Trump reflation trade go on?