• USD/MXN regain positive traction on Thursday, albeit lacks any follow-through.
• The overnight failure near the descending channel hurdle favours bearish traders.
• A move beyond the 200-period on H4 is needed to negate the negative outlook.

The USD/MXN pair attracts some buying on Thursday and reverses a part of the previous day's retracement slide from over a one-week high, around the 17.2575 area. Spot prices trade with a mild positive bias just below the 17.15 level through the early part of the European session, albeit seems to lack follow-through.

From a technical perspective, the overnight failure near a hurdle marked by the top end of a descending channel, extending from the 18.00, or the May swing high, warrants caution for bullish traders. Moreover, oscillators on the daily chart are holding deep in the bearish territory and have also recovered from the overbought zone. This makes it prudent to wait for a convincing break through the descending channel resistance, currently around the 17.2320-17.2325 area, before confirming that the USD/MXN pair has formed a near-term bottom.

The subsequent move-up has the potential to lift spot prices to the 100-period Simple Moving Average (SMA) hurdle near the 17.3200 area. Some follow-through buying will set the stage for a meaningful near-term recovery towards the 17.4265-17.4270 area en route to the 17.5020-17.5025 region and the next relevant resistance around the 17.6000 level.

On the flip side, the 17.0560-17.0555 region now seems to protect the immediate downside ahead of the multi-year low, around the 17.0245-17.0240 area. This is followed by the 17.00 psychological mark and the descending trend-channel support, which if broken decisively will be seen as a fresh trigger for bearish traders. The USD/MXN pair might then turn vulnerable to accelerate the fall towards the 16.60-16.55 zone before dropping to the November 2015 swing low, around the 16.35 region.