Oct. 10 (Bloomberg) -- The Mexican peso may strengthen to its highest level versus the U.S. dollar in over a year following a corrective phase, according to JPMorgan Chase & Co., citing oversold and diverging momentum measures.
The peso may depreciate to the 12.91-to-12.95 per dollar range before falling to 13 in the short term, Niall O’Connor, a New York-based technical analyst at JPMorgan, wrote today in a note to clients. The currency may bounce off this so-called ceiling and reverse back to 12.55 per dollar, its highest level since Sept. 9, 2011, he said. The peso rose to 12.6635 last week, a level it hadn’t reached since March.
“The decline in the dollar last week against the peso may have been overdone short term,” O’Connor said in a telephone interview. “We’re in a temporary recovery phase. It looks like it will correct up, but the bottom line is that the medium-term trend is still lower.”
The Mexican currency fell 0.2 percent to 12.8962 per dollar at 11:44 a.m. in New York after declining as much as 0.8 percent yesterday, its biggest drop since Sept. 17.
The currency leads all 16 of the dollar’s biggest peers with a gain of 8.1 percent this year.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.
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