USD/MXN Price Analysis: Mexican peso nears key trendlines ahead of Banxico rate decision

• USD/MXN seesaws inside a short-term triangle formation.
• Banxico is widely anticipated to announce another rate cut to 5.5%.
• A three-week-old falling trend line adds to the upside barriers.
• A downside break of the triangle can refresh monthly low.

USD/MXN takes rounds to 24.25, up 0.08% on a day, as Tokyo opens for trading on Thursday. That said, the pair has been trading in a week-long triangle, while also keeping below a short-term falling trend line resistance, ahead of the Mexican central bank’s interest rate decision, up at 18:00 GMT.

The Banxico is expected to roll out another rate cut while considering the need to combat the coronavirus (COVID-19). In doing so, it can drag the benchmark rate down to 5.5%, per market consensus.

Read: Mexico: Banxico should cut rate at least 75bps – BBVA

Technically, a falling trend line from April 24, currently near 24.30, acts as the immediate resistance ahead of the said triangle’s upper line, at 24.40 now.

In a case where the Banxico manages to trigger more weakness of the Mexican peso beyond 24.40, the monthly top surrounding 24.90 and late-April highs near 25.30 will be on the bulls’ radars.

On the contrary, a downside break of the triangle’s support line, currently near 24.00, will challenge the monthly low close to 23.55.

USD/MXN four-hour chart

Trend: Sideways