USD/MXN Upside Reversal Underway
USD/MXN has finally managed to develop a new leg higher. The DXY’s aggressive rally helped the USD to take full control and to dominate the currency market. The pair has found temporary resistance, but it could resume its growth anytime soon.The FOMC meeting boosted the DXY, so the greenback has rallied since yesterday night. USD/MXN has slipped lower in the last hours also because the US Unemployment Claims increased unexpectedly in the previous week.No taper tantrums after Fed policy shift hintsThe surprise shift in the stance of the the US Federal Reserve on both interest rates timing and inflation is boosting the dollar. The Fed has brought forward by a year – to 2023 – the first rate increase. Also, Fed chairman Jay Powell hinted strongly that there was a chance that the inflation spike may not be transitory after all.On previous occasions when the Fed has suggested a more hawkish monetary policy, it has led to market gyrations in the so called ‘taper tantrums’ of the past, when there were hints that the central bank might trim or stop its asset purchasing programme.The indicator has reported 412K jobs versus 360K expected and compared to 375K in the previous reporting period. Actually, a temporary decline was somehow expected after the most recent rally.
USD/MXN has moved down within a down channel after breaking above the downtrend line. The aggressive upside breakout from this pattern and making new highs confirmed a potential strong growth. It has found resistance above the 50% retracement level and now is traded lower at 20.4568. It could retest the 38.2% retracement level before resuming its growth. Consolidating above the 38.2% (20.3734) could bring us a new long opportunity and could validate a new bullish momentum.Also, a new higher high, jumping and closing above 20.6214 could activate more gains towards the 61.8% (20.8550) retracement level. The outlook is bullish, so the current drop could help us to catch a new upwards movement. Get Free Forex Signals – 82% Win Rate!3 Free Forex Signals Every Week – Full Technical Analysis