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USDMXN Bear Leg Extends, Sheinbaum Opting For Policy Continuity

MEXICO
  • USDMXN is extending lower on Monday, helped by the pullback for the dollar in sympathy with the move in US yields. The trend direction in USDMXN is unchanged and remains bearish. Support at 16.6468, the Mar 14 low and bear trigger, has recently been cleared. The break maintains the price sequence of lower lows and lower highs and note too that moving average studies are in a bear mode position, highlighting a clear downtrend.
  • The pair is trading lower again today and his opens 16.3079, the 1.382 projection of the Dec 5 - Jan 8 - Jan 17 price swing. On the upside, key resistance has been defined at 16.9473, the Mar 19 high. First resistance is 16.6833, the 20-day EMA.
  • Over the weekend, presidential candidate Sheinbaum emphasized her connection with the current President and promised she would continue his policies. With AMLO’s popularity well above 50% it seems Sheinbaum does not have many reasons for distance from the President’s populist approach before the June elections. “We’re going to keep transforming Mexico,” Sheinbaum said. This potential policy continuity may be diminishing any embedded election risk premium, providing further comfort for MXN bulls at this juncture.
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