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Price Signal Summary: USDMXN Corrective Cycle Still In Play

LATAM FX
  • USDMXN continues to trade higher and extend the current corrective bounce. The trend outlook is bearish. This follows the sell-off since Nov 26 that established a sequence of lower lows and lower highs. Attention is on 20.2517, Nov 9 low and 20.1196, Oct 26 low. The latter is a key support. Note however that the pair has this week breached resistance at 20.7603, Jan 6 high. The break of this hurdle highlights the possibility of a stronger reversal that opens 20.9954 initially, 61.8% of the downleg between Nov 26 and Jan 18.
  • USDBRL maintains a softer tone. Price is again challenging 5.3885, the Nov 11 low. A clear break would open 5.3249, 50.0% of the Jun - Oct rally last year. Tuesday’s move lower and the subsequent follow through means the pair remains below short-term resistance at 5.5823, Jan 18 high. An initial firm resistance has also been established at 5.5245, the Jan 24 high. A break above this level would ease bearish pressure.
  • The USDCLP trend direction remains down and short-term gains are considered corrective. Attention is on support at 788.22, the Nov 10 low ahead of 783.23, the 50.0% retracement of the May - Dec 2021 upleg. Recent weakness resulted in a break of trendline support - on Jan 5 - drawn from the May 10, 2021 low and a break of the 50-day EMA on Jan 7. The extension lower reinforces a clear bearish theme. Initial firm resistance is seen at 818.86 the 20-day EMA.
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