The Mexican peso has been on a downward trajectory against the Japanese yen since September, a decline fueled by global bond-market turmoil and rising interest rates. Technical analysts warn that this weakening trend may continue, citing several bearish signals.
A key warning came on September 1, when the peso reached a peak of 9.4441 yen, just shy of its May 2024 high of 9.4532. This double top pattern is seen as a bearish indicator, suggesting further declines. The situation has worsened with the formation of a death cross, where the 50-day moving average is about to drop below the 200-day moving average, reinforcing the downward trend.
The peso recently fell below its March 30 low of 8.7892 yen and struggled to recover, indicating strong resistance at that level. However, there is a potential bright spot: the peso hit a low of 8.5441 yen on October 1 and rebounded from a similar level on October 9, forming a double bottom. This suggests sellers may be reluctant to push the currency lower for now.
If the peso breaks below 8.5441 yen, analysts will look to Fibonacci retracements for possible targets, including 8.4486 yen (a 38.2% retracement) and 8.1411 yen (a 50% retracement). Conversely, if the peso rises above its October 6 high of 8.8275 yen and its 200-day moving average of 9.0931 yen, the downward pressure may ease, potentially leading to a return to this year's high of 9.4441 yen.