Mexican peso soars as EM rally

Emerging markets posted strong gains today as the greenback weakened.  The Mexican peso was a standout gaining over 1% and reaching the strongest levels against the dollar in over 2 months.  Their was no specific news that supported the move in the peso.  On Christmas Eve, Mexico’s Congress gave approval to their 2019 budget.

Price action on the USD/MXN daily chart shows that bearish move accelerated on the break of the 19.80 support level.  Price is now trading comfortably away from the 50-day SMA and approaching the 100-day SMA, which currently trades around 19.5257.

Today’s low may have formed a bullish butterfly pattern that could support a support a bounce.  Point D is targeted from the both 161.8% Fibonacci expansion level of the X to A move and B to C leg.  The pattern is not an ideal butterfly formation and may not provide a significant bounce since the last candle has a long body.  If bearish momentum persist, price may target the 19.40 level.

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya