USD/MXN Technical Analysis: Outlook for Mexican peso improves after recovery from 5-month lows

• The USD/MXN hit earlier today at 20.65, the highest level since June but then pulled back making a reversal. The momentum indicator turned to the downside and price dropped to test the 20-day moving average, showing lack of strength so far for a move above 20.65. 
• A daily close above 20.50 could reinforce the bullish trend, but a breakout on top of 20.65 is needed to open the doors to further gains. 
• After today’s reversal and the failure at 20.60, the Mexican peso could recover further, particularity if the pair drops firmly under 20.35 (20-day moving average). The next support to watch is 20.20; below the 20.00 area would be exposed. 
• The main trend still points to the upside in USD/MXN, but the US dollar positive tone in the short-term eased after today’s reversal, and now the bias is skewed toward an extension of the bearish correction. 

USD/MXN Daily Chart