USD/MXN turns negative after reaching 3-week highs

The Mexican peso erased losses during the last hours amid a decline of the US Dollar across the board and a rebound in crude oil prices. Earlier today it was trading at the lowest in three weeks. 

USD/MXN on corrective mode 

The pair still holds a bullish bias in the short-term despite today’s reversal. Two weeks ago bottomed at 17.44, the lowest since May 2016. Since then it has been correcting higher. 

Today, after the release of the US ADP employment report peaked at 17.96, the strongest level since July 11. Then it lost strength and accelerated the down-move during the American session. Recently bottomed at 17.77 and at the moment it trades at 17.81, down 0.45% for the day. It is the first decline after four days of gains. 

Technical outlook 

USD/MXN short-term outlook favors the upside but the main trend still points to the downside. If the US dollar is able to hold above 17.80, it would keep an important support for a continuation of the recovery. That area is relevant support and also where the 20-day moving average is located. 

Above 17.80, the level to watch is 17.95/18.00, (psychological level/downtrend line); a break higher, could open the doors to more gains. 

On the opposite direction, if USD/MXN is rejected from above 17.80, the peso could gain strength to test again the medium-term support level at 17.45; before that, 17.55 could halt the decline.