• USD/MXN fades bounce off the lowest level since May 2016.
• Fortnight-old support line, oversold RSI (14) line challenge Mexican Peso buyers.
• 50-SMA restricts short-term USD/MXN upside ahead of the key 200-SMA hurdle.
• Multiple support lines, year 2016 bottom stand tall to challenge pair sellers.

USD/MXN consolidates the biggest daily loss in nearly two weeks at the lowest levels since May 2016 heading into Monday’s European session. In doing so, the Mexican Peso (MXN) pair traces the market’s cautious mood, as well as positioning for the US inflation and Federal Reserve (Fed) monetary policy decision.

Technically, the USD/MXN pair struggle to defend the previous day’s bounce off a downward-sloping support line from May 29 amid oversold RSI (14).

Not only the oversold RSI conditions and the short-term support line, around 17.23 by the press time, but a three-month-old descending trend line, close to 17.21 at the latest, also challenge the USD/MXN bears.

It’s worth noting that a falling support line from early April, close to 17.06, precedes the year 2016 bottom of around 17.05 and the 17.00 round figure to challenge the Mexican Peso pair’s further declines.

On the contrary, the 50-SMA level of around 17.47 restricts the immediate upside of the USD/MXN pair ahead of the 200-SMA hurdle of 17.69.

In a case where the USD/MXN bulls manage to keep the reins past 17.69, as well as cross the 17.70 round figure, the corrective bounce may aim for the late May peak of around 17.99.

USD/MXN: Four-hour chart

Trend: Limited downside expected