USD/MXN dips after failing to surpass the 50-day moving average, targeting July 2024 low around 17.60

    by VT Markets
    /
    Jan 16, 2026

    FXStreet Insights Team

    The FXStreet Insights Team is made up of journalists who gather market insights from experts. They provide commercial notes and additional insights from both internal and external analysts. The USD/MXN has recently moved out of its range after struggling to break above the 50-day moving average. This development brings the important low from July 2024, which is around 17.60, into focus. Traders should view this situation as a continuation of the downward trend. This downward shift is backed by strong fundamentals. Banxico has kept its key interest rate steady at 11.00% until the end of 2025. In contrast, recent weak US jobs data has led to expectations of a Federal Reserve rate cut by March. The considerable difference in interest rates continues to make pesos more attractive than dollars. With clear bearish momentum, there is an opportunity to buy put options with strike prices below the 17.60 support level. If this level breaks, it could speed up the decline, making strike prices around 17.50 or 17.40 appealing in the coming weeks. Bear put spreads can also be used to reduce entry costs while targeting the 17.30/17.15 range.

    Trading Strategies

    We should note the positive divergence on momentum indicators, which suggests that downward momentum is slowing, but this does not signal a reversal yet. For traders expecting a short-term bounce, the descending trend line around 18.00 is a critical resistance area. A smart strategy could be to sell call options or set up bear call spreads with strikes at or above 18.00 to take advantage of a potential failed rally. The peso’s strength is supported by ongoing foreign direct investment from the nearshoring trend. In 2025, this trend resulted in a record $43.9 billion in the first three quarters. Historically, strong capital inflows have helped maintain peso strength over several quarters. This fundamental backdrop suggests that selling any rallies in USD/MXN could be the better long-term strategy. Create your live VT Markets account and start trading now.

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