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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With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.
Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street 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 CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal.
Ed holds a BA in Economics from Rutgers University.