USD/MXN: Consolidating above 22.00, Mexican peso steady looking at Wall Street
|- Mexican peso flat versus US dollar on Wednesday amid low volatility.
- USD/MXN maintains a strong (inverse) correlation with Wall Street indexes.
The USD/MXN is hovering around 22.30, flat for the day after moving in a small range. It peaked during the Asian session at 22.47 and bottomed later at 22.15, on a quiet session across financial markets.
The greenback posted mixed results against emerging and commodity currencies. In Wall Street, near the end of the session, the Dow Jones is down 0.30%, and the Nasdaq gains 0.39%. Optimism about the reopening of the economy across the globe is being offset by geopolitical concerns and the increase in COVID-19 cases in southern US states and Latin America.
The correlation between the USD/MXN and Wall Street indexes is high at the moment. The sharp bounce from the 21.50 area to 22.95 took place when equity markets tumbled. The rebound that followed pushed the Mexican peso to the upside. As long as it remains the case, the direction of USD/MXN will likely be determined by US stocks.
From a technical perspective, the pair is consolidating around the 20-day moving average. On the downside, two critical supports emerge at 21.90 and 21.45/50 (June low). On the upside, above 22.50, the June high slightly below 23.00 could be revisited.
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