• USD/MXN remains depressed near a one-and-half-week low touched on Thursday.
• Some follow-through selling below the 50-day SMA will confirm a fresh breakdown.
• Attempted recovery might now confront resistance near the 17.20-17.25 confluence.

The USD/MXN pair struggles to gain any meaningful traction during the Asian session on Friday and languishes near the 17.10-17.05 region, or a one-and-half-week low touched the previous day.

The aforementioned area represents the 61.8% Fibonacci retracement level of the rally from the August monthly swing low, which should now act as a key pivotal point for intraday traders. Meanwhile, technical indicators on the daily chart have just started drifting in the negative territory and support prospects for an extension of the USD/MXN pair's downfall witnessed over the past week or so.

That said, it will still be prudent to wait for a convincing break below the 50-day Simple Moving Average (SMA), around the 17.00 mark, before positioning for a further depreciating move. Spot prices might then weaken below the 16.90 intermediate support and challenge a multi-year low, near the 16.70 area touched in August. Some follow-through selling will be seen as a fresh trigger for bearish traders.

On the flip side, any meaningful recovery might now confront stiff resistance and remain capped near the 17.20-17.25 confluence, comprising the 50% Fibo. level and the 100-day SMA. The next relevant hurdle is pegged near the 38.2% Fibo. level, around the 17.35 region, above which the USD/MXN could surpass the 23.6% Fibo. barrier near the 17.45-17.50 barrier and retest the multi-month top, around the 17.70 zone.

USD/MXN daily chart

Technical levels to watch