USD/MXN drifts towards 100-DMA; How relevant is Banxico's 0.50% expected hike?

Currently, USD/MXN is trading at 20.41, down -0.28% or (571)-pips on the day, having posted a daily high at 20.74 and low at 20.53.

The Mexican Peso seems to continue appreciating against a confused US dollar as traders aligned bets towards the next trading leg for the exotic. Furthermore, markets clocked a 90% probability, according to Banamex's survey, to experience 0.50% hike from Banxico. There is evidence to welcome the central bank action 'if' everything goes as expected due to increases in gasoline prices that slowly erode the population buying power.   

Historical data available for traders and investors indicates during the last 6-weeks that USD/MXN, a commodity-linked and exotic currency, had the best trading day at +1.83% (Jan.10) or 3983-pips, and the worst at -2.22% (Jan.25) or (4684)-pips. 

Mexican Peso: A two-way street for now - Nomura

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 20.90 (50-DMA), then at 21.38 (high Jan.27) and above that at 21.61 (high Jan.5). While supports are aligned at 20.20 (100-DMA), later at 19.72 (low Nov.10) and below that at 19.32 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to drift down the hill towards the oversold territory. Therefore, there is evidence to expect further Mexican Peso gains in the near term. 

On the medium-term view, if 22.03 (high Jan.15) is in fact, the top during the first semester in 2017, then traders and investors would have allocated risk around the following support levels: 20.28 (low Jan.29), then at 19.87 (short-term 61.8% Fib) and finally below that at 19.44 (previous resistance level and now support from Feb.2, 2016) . On the other hand, upside barriers are aligned at 20.74 (high Feb.5), later at 21.09 (high Nov.12) and above that at 21.58 (high Jan.22).

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