USDMXN on the rise

The Mexican central bank is set to leave interest rates untouched on Thursday after cutting them by 0.25% last month to the lowest level in five years. Another 25 basis point cut cannot be completely ruled out and this is likely to weigh on the Mexican Peso as we can see it weakening. Rising US Treasury yields have also exerted upward pressure on USDMXN, narrowing the interest rate differential between the two currencies. 

The pair hit bottom in January on the daily chart and formed a series of higher highs and higher lows, which is a definition for an uptrend. Last week it touched the rising trendline at point A and bounced back from it. The course is trading above its 50 moving average and is heading towards the previous high (B) which is the last touching point on a descending trendline started in May 2020.

If the course breaks above this trendline and the previous high (B), it will have clear way towards the resistance zone at the 22.40 -22.60 (C). On the other hand, falling below the rising trendline and the previous low (A), it could continue its longer term decline.