• USD/MXN consolidates in a range below the 17.0000 mark through the Asian session on Thursday.
• The formation of the descending channel and the recent price action still favours bearish traders.
• The RSI on the daily chart is on the verge of breaking into the oversold zone and warrants caution.

The USD/MXN pair struggles to capitalize on the previous day's modest bounce from the 16.8085 region, or its lowest level since December 2015 and oscillates in a narrow trading band through the Asian session on Thursday. Spot prices, meanwhile, now seem to have found acceptance below the 17.0000 mark and remain vulnerable to depreciate further.

The decline witnessed over the past three months or so has been along a downward-sloping channel, which points to a well-established short-term bearish trend. Furthermore, the recent failure near the trend-channel resistance, which coincides with the 50-day Simple Moving Average (SMA), and the subsequent slide validates the negative outlook for the USD/MXN pair. That said, the Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the oversold zone and warrants some caution.

Hence, any further decline below the overnight swing low is more likely to find support near the lower end of the aforementioned channel, currently pegged around the 16.6750 area. A convincing breakdown below, however, will be seen as a fresh trigger for bearish traders and set the stage for an extension of a one-year-old downtrend.

On the flip side, any meaningful recovery now seems to confront stiff resistance near the 17.0000 horizontal support breakpoint. This is followed by the 17.0500 hurdle, which if cleared decisively might trigger a short-covering rally and lift the USD/MXN pair towards the 17.1200 intermediate barrier. The momentum could get extended further towards the next relevant resistance near the 17.1790-17.1800 region en route to the 17.2420-17.2430 supply zone