Emerging markets posted strong gains today as the greenback weakened. The Mexican peso was a standout gaining over 1% and reaching the strongest levels against the dollar in over 2 months. Their was no specific news that supported the move in the peso. On Christmas Eve, Mexico’s Congress gave approval to their 2019 budget.
Price action on the USD/MXN daily chart shows that bearish move accelerated on the break of the 19.80 support level. Price is now trading comfortably away from the 50-day SMA and approaching the 100-day SMA, which currently trades around 19.5257.
Today’s low may have formed a bullish butterfly pattern that could support a support a bounce. Point D is targeted from the both 161.8% Fibonacci expansion level of the X to A move and B to C leg. The pattern is not an ideal butterfly formation and may not provide a significant bounce since the last candle has a long body. If bearish momentum persist, price may target the 19.40 level.