USD/MXN Price Analysis: Bullish momentum fades, critical support around 19.95

• USD/MXN fails to break medium-term trendline, retreats toward 20.00
• Risk appetite supports Mexican peso, Banxico meeting on Thursday.

The USD/MXN is trading modestly higher on Monday, after falling sharply on Friday on the back of a general decline of the US dollar and supported by risk appetite across financial markets. What happens in Wall Street continues to be important for the cross. On Thursday the Bank of Mexico meets, a rate cut is expected.

Last week, USD/MXN failed to hold above 20.40 and pulled back. The bullish momentum eased favoring a downside correction. The pair is holding above the 19.95/20.00 area, which is a critical support, where the 20 and 55-day moving averages converge, and a horizontal and a psychological support. A close clearly below 19.95 would weaken the outlook for the dollar.

At the moment, USD/MXN is consolidating above the 20.00 area, showing a modest upside bias, but in order to clear the way to more gains, it needs to make a firm break above 20.40, targeting 20.60. Above the next strong resistance stands at 20.80.

USD/MXN daily chart