LATAM FX: Poorer Risk Sentiment, Greenback Strength Weigh on MXN & BRL
- Weaker equity markets and the associated haven demand in currency markets have worked against the likes of MXN and BRL on Tuesday, although weakness is broadly in line with the adjustment for USD indices.
- Overall, the outlook for USDMXN remains unchanged with the pair in consolidation mode close to recent lows. The short term trajectory is bearish and attention is on the next key support at 17.8981, the Mar 9 low. A breach of this level would open 17.5746, the Aug 25 2017 low. Initial firm resistance is at 18.4011, the Apr 5 high.
- USDBRL is holding on to its recent gains having recovered from the Apr 14 low of 4.8928. Despite this latest short-term recovery, the trend outlook also remains bearish. The pair has traded lower recently resulting in a break of key support at 4.9410, the Feb 2 low. This confirmed a resumption of the broader bear cycle that started Nov 17 last year. Further weakness would open 4.8478, the Jun 8 2022 low. The next firm resistance is seen at 5.1165, the 50-day EMA.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Corrective Cycle
- RES 4: 1.4000 Psychological round number
- RES 3: 1.3977 High Oct 13
- RES 2: 1.3898 High Oct 14
- RES 1: 1.3814/3862 High Mar 15 / 10 and the bull trigger
- PRICE: 1.3764 @ 15:52 GMT Mar 24
- SUP 1: 1.3631 Low Mar 23
- SUP 2: 1.3589 50-day EMA
- SUP 3: 1.3515 Low Feb 22
- SUP 4: 1.3442 Low Feb 20 / 21
The recent move lower in USDCAD is considered corrective and this has allowed a recent overbought condition to unwind. A key support area to watch lies at 1.3589, the 50-day EMA. A clear break of the average would signal scope for a deeper corrective pullback. On the upside, the bull trigger has been defined at 1.3862, the Mar 10 high. Clearance of this level would resume the uptrend and open 1.3977, the Oct 13 high.
AUDUSD TECHS: Correction Still In Play
- RES 4: 0.6865 High Feb 22
- RES 3: 0.6824 High Feb 24
- RES 2: 0.6784 High Mar 1
- RES 1: 0.6769 50-day EMA and a key resistance
- PRICE: 0.6647 @ 15:48 GMT Mar 24
- SUP 1: 0.6625 Low Mar 24
- SUP 2: 0.6590/47 Low Mar 15 / 61.8% of the Oct - Feb bull cycle
- SUP 3: 0.6500 Round number support
- SUP 4: 0.6425 2.00 projection of the Feb 2 - 6 - 14 price swing
The AUDUSD trend condition remains bearish, however, the bull cycle that started Mar 10, remains in play now. The move higher is considered corrective. The 20-day EMA has been breached and this exposes resistance at the 50-day EMA - at 0.6769. A clear break of the average would strengthen a bullish theme and suggest scope for a stronger short-term recovery. Key support and the bear trigger lies at 0.6565, the Mar 10 low.
EURJPY TECHS: Corrective Pullback
- RES 4: 145.57 High Mar a2 and a key resistance
- RES 3: 144.96 High Mar 15
- RES 2: 143.98 76.4% retracement of the recent Mar 2 - 20 bear cycle
- RES 1: 142.64/143.63 50-day EMA / High Mar 22
- PRICE: 140.55 @ 15:47 GMT Mar 24
- SUP 1: 140.00 Round number support
- SUP 2: 138.83 Low Mar 20
- SUP 3: 137.96 3.0% 10-dma envelope
- SUP 4: 137.92 Low Jan 19
EURJPY has pulled back from Wednesday’s high of 143.63. This level represents a key short-term resistance where a break is required to reinstate a bullish theme. A continuation lower would expose key support at 138.83, the Mar 20 low and a bear trigger. Note that moving average studies remain in a bull mode set-up - this suggests the latest pullback is a correction. A break of 143.63 would open 143.98, 76.4% of the Mar 2 - 20 bear cycle.
