FxNews—The dollar index reached an 11-week peak at 103.8 this Friday, marking its third consecutive week of gains. This increase is largely driven by robust economic figures from the U.S. and the so-called “Trump trade.”
The daily chart below shows the U.S. Dollar index price is pulling back from the 61.8 Fibonacci retracement level, trading at approximately 103.6 as of this writing.
U.S. Retail Sales Surge in September
Recent data unveiled on Thursday indicates a significant uptick in U.S. retail sales for September, surpassing expectations. Additionally, the latest figures for weekly jobless claims fell below anticipated levels.
The likelihood of a Trump election victory, which seems more plausible now, has positively influenced the dollar. Trump’s proposed policies on tariffs, taxes, and immigration could lead to inflation, which may prevent the central bank from reducing interest rates further.
Upcoming U.S. Housing Data & Fed Insights Awaited
The market focus will shift to data on U.S. housing starts and building permits, which will be released this Friday. Investors are also keenly awaiting new insights from Federal Reserve officials.
On the international front, the dollar has gained strength due to the euro’s decline following the European Central Bank’s decision to reduce borrowing costs by 25 basis points, marking the third reduction this year.
USDMXN Technical Analysis – 18-October-2024
The USD/MXN uptrend eased when the price peaked at the September 3 high, the 19.98 mark. Consequently, the price dipped, approaching immediate support at 19.72, the September 30 high.
Today’s downtick momentum was expected because the Stochastic Oscillator was hovering in overbought territory. Additionally, the RSI 14 signaled that the U.S. dollar is overpriced against the Mexican peso.
Despite today’s dip, the primary trend should be considered bullish because the market is above the 50- and 100-period simple moving averages. However, USD/MXN bears have the potential to push the price down as the Awesome Oscillator and the Boom and Crash Gold Miner histogram turned red, meaning the bear market strengthens.
Additionally, the daily chart formed a bearish Gartley harmonic pattern, signaling a new bearish wave could be on the horizon.
Overall, the technical indicators suggest the primary trend is bearish, but the USD/MXN price could decline further, or the trend could change from a bull market to a bear market.
USDMXN Forecast – 18-October-2024
The September 30 high at 19.72 is the immediate resistance. From a technical perspective, the downtrend will likely be eased if the USD/MXN price is above 19.72. In this scenario, a new bullish wave could emerge and revisit the 19.98 resistance from 19.72.
Furthermore, if the bullish pressure exceeds 19.98, the next barrier could be the September 2024 all-time high of 20.14. Please note that the bullish outlook should be invalidated if USD/MXN falls below 19.72.
USDMXN Bearish Scenario
If the current downtrend exceeds the immediate resistance (19.72), it could target the next supply zone at 19.53, backed by the 100-period simple moving average.
USDMXN Support and Resistance Levels – 18-October-2024
Traders and investors should closely monitor the key levels below to make informed decisions and adjust their strategies accordingly as market conditions shift.
- Support: 19.72 / 19.53 / 19.28
- Resistance: 19.98 / 20.14
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.