USD/MXN darts higher as bulls target the 20.70 resistance
- The USD/MXN pair rose today as investors reacted to the lower crude oil prices.
- It also rose due to the overall stronger US dollar.
- The pair also because of the mixed industrial production data from Mexico.
The USD/MXN pair rose by more than 1.1% today in reaction to the overall stronger US dollar and the weak crude oil prices. It is trading at 20.1925, which is the highest level since December 21.
Stronger US dollar
The dollar is rising today as traders react to the rising number of coronavirus cases in China, Europe, and the United States.
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In China, the government has placed a lockdown in Hebei province to prevent the cases from rising. Hebei neighbours Shanghai and is home to more than 11 million people. The current lockdown happened as the number of cases in the province rose to the highest level since last year.
The same situation is happening in Europe. Yesterday, the UK confirmed more than 60,000 cases, pushing the total number to more than 3.1 million. Deaths have increased to more than 80,000. As a result, the government is considering implementing more lockdowns to curtail the spread.
The dollar is also rising because of the overall political situation in the United States where members of congress will start debating Donald Trump’s impeachment. While the new impeachment is supported by Democrats, some Republicans, including some former allies have sounded supportive.
Low oil prices
The USD/MXN pair is also rising because of the overall low crude oil prices. The price of Brent and West Texas Intermediate (WTI) has dropped by more than 1% and 0.50%, respectively.
This action is mostly because of the rising number of coronavirus cases and the rising rigs in the United States. In a report on Friday, Baker Hughes said that the number of rig count increased for the seventh consecutive week. This is an early sign of the future rising oil production.
Meanwhile, the Mexican Bureau of Statistics released mixed industrial production data. In November, the production rose by 1.1% leading to a 3.7% annual decline.
USD/MXN technical outlook
On the daily chart, we see that the USD/MXN pair formed a double bottom pattern at 19.6752, which is along the 78.6% Fibonacci retracement level. Also, the price is between the 25-day and 50-day exponential moving averages. It is also between the descending channel that’s shown in blue.
Therefore, the pair will possibly continue rising as bulls target the upper side of the channel at 20.70. However, a move below the lower side of the channel will invalidate this trend. You can use our free forex trading courses to learn more about technical analysis.