The pair failed a new low in August, making a multiple bottom in summer near 16.6. At the moment the rate is testing its static resistance, making a triple top near 17.4.
In case of a breakout the bearish downtrend that has rewarded both carry traders and trend followers could be at risk. In case of a reversal with a strong greenback both CTAs and Swaps hunters would see their positions losing Mark to Market value.
Possible also a formation of a trading range before prices would take direction. The downtrend started after the fly to quality and deleveraging trading during the beginning of Covid 19, thus almost 4 years ago.
In case of a rally of USD/MXN the test of the 200 day SMA , now near 18 area, would be a relevant test to see if the downtrend has finished its path. The RSI (14) is heading towards overbought, while lagging standard deviation on 20 session is increasing after being flat for 3 months.
