Forex technical analysis: USDMXN little changed after earthquake.

No reports of damage

The USDMXN is little changed so far after reports of a strong 7.4 magnitude earthquake around Mexico City.

The instinctive thought is the impact should be currency negative for the MXN (USDMXN goes higher). However, the impact on a currency can be the exact opposite - particularly if there is massive damage. Why? The flow of funds is repatriated back to the home country for the massive repairs. For that to happen, you need to require "massive repairs" from devastating destruction.

The muted reaction so far suggests uncertainty about the damage and as a result the flows.

Technically, looking at the 4-hour chart below, the pair is trading mostly below the 200 bar MA on the 4-hour chart at 17.7801 (see H4 MA:200 in the chart below). The 50% of the September trading range comes in at 17.7849. If the MXN is to get weaker, a sustained move above those levels will be eyed.

On the downside, the pair spiked above the 100 and 200 hour MAs (lower blue and green lines in the chart below) at 17.7134 and 17.70478 respectively.