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Mexican peso soars as EM rally

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.

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