The USD/MXN pair continues with its struggle to register any meaningful recovery and oscillates in a range near its lowest level since May 2016 touched on Monday. The pair remains confined in a narrow band, around the 17.30-17.25 area, through the Asian session on Tuesday and the lack of any buying interest suggests that the downward trajectory witnessed over the past three weeks or so is still far from being over.

From a technical perspective, the USD/MXN pair has been drifting lower along a downward-sloping channel extending from the vicinity of the 18.00 mark touched on May 23. This points to a well-established short-term bearish trend and supports prospects for a further depreciating move. That said, the Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the oversold territory and warrants some caution.

Hence, it will be prudent to wait for some near-term consolidation or a modest recovery before placing fresh bearish bets around the USD/MXN pair. Nevertheless, spot prices remain on track to challenge support marked by the lower end of the trend channel, currently around the 17.15 region, which is followed by the 17.00 round figure. A convincing break below the latter will mark a fresh breakdown and pave the way for further losses.

On the flip side, any meaningful recovery attempt is likely to confront stiff resistance ahead of the mid-17.00s, representing the top end of the aforementioned channel. A sustained strength beyond might trigger a short-covering rally and lift the USD/MXN pair towards the 17.70 intermediate resistance en route to the 18.00 round figure. The latter should act as a pivotal point, which if cleared decisively will suggest that spot prices have formed a near-term bottom.