USD/MXN Price Analysis: Pair extends gains around 17.1340, aligns to seven-day EMA
- USD/MXN trades higher on the back of the Fed's hawkish stance on interest rates trajectory.
- MACD indicates that recent strength may perish.
- 17.0000 psychological level lined up with the weekly low emerges as the key support.
USD/MXN continues to gain on the second successive day, trading higher around 17.1340 during the Asian session on Thursday. As anticipated, the US Federal Reserve (Fed) opted to keep the existing benchmark policy rates unchanged at 5.5% during the meeting held on Wednesday.
Fed projected an additional rate hike in 2023, which reinforces the strength of the USD/MXN pair. Moreover, in its monetary policy statement, the Federal Open Market Committee (FOMC) has revealed its expectation for slightly elevated inflation compared to its previous forecasts.
The immediate support for the USD/MXN pair appears around the 17.0000 psychological level lined up with the weekly low at 16.9985.
A break below the latter could help the pair to navigate the region around the 16.9000 psychological level.
On the upside, the seven-day Exponential Moving Average (EMA) at 17.1394 emerges as the immediate barrier, following the 17.1500 psychological level.
A firm break above the level could inspire the USD/MXN bulls to explore the region around the 17.1600 level aligned to the 23.6% Fibonacci retracement at the 17.1626 level.
The Moving Average Convergence Divergence (MACD) line remains above the centerline, but it exhibits a pattern of divergence beneath the signal line. This pattern indicates that the recent strength in the USD/MXN pair may perish.
However, the pair’s momentum is neutral as the 14-day Relative Strength Index (RSI) lies on the 50 level.
USD/MXN: Daily Chart