• USD/MXN attracts fresh buyers on Monday, albeit lacks follow-through beyond the 38.2% Fibo. level.
• The technical setup favours bulls and supports prospects for an extension of a one-month-old uptrend.
• A convincing break below the 23.6% Fibo. level is needed to negate the near-term positive outlook.

The USD/MXN pair regains some positive traction on the first day of a new week and reverses a part of Friday's retracement slide from the vicinity of the mid-18.0000s, or its highest level since March 24. Spot prices, however, struggle to capitalize on the uptick beyond the 38.2% Fibonacci retracement level of the steep fall witnessed in July and currently trade around the 18.2475 region, still up over 0.35% for the day.

Looking at the broader picture, the recent breakout through the 17.8400-17.8555 confluence, comprising a technically significant 200-day Simple Moving Average (SMA) and a multi-month-old descending trend-line, favours bullish traders. That said, the Relative Strength Index (RSI) on the daily chart is flashing slightly overbought conditions and holding back bulls from placing fresh bets around the USD/MXN pair.

Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of the recent well-established uptrend witnessed over the past month or so. Any corrective decline, meanwhile, is likely to attract fresh buyers near the 18.0000 mark. This should help limit the downside for the USD/MXN pair near the aforementioned confluence resistance breakpoint near the 17.8555-17.8400 area.

The next relevant support is pegged near the 23.6% Fibo. level, around the 17.6635 region, which if broken decisively will negate the positive outlook and shift the near-term bias back in favour of bearish traders. The USD/MXN pair might then accelerate the slide further towards the 17.4200-17.3785 horizontal support en route to the 17.0550-17.0245 region before eventually dropping to test sub-17.0000 levels.

On the flip side, momentum beyond the 38.2% Fibo. level is likely to confront some resistance near Friday's swing high, around the 18.4935 region. Some follow-through buying has the potential to lift the USD/MXN pair further to the 18.7980-18.8245 area, representing 50% Fibo. level. A sustained strength beyond the latter will be seen as a fresh trigger for bulls and pave the way for a further near-term appreciating move.