USD/MXN drops to test 19.00 and appears on its way to 18.90 despite Trump's tweets
|- Latin American currencies rise against US Dollar on Tuesday.
- Mexican peso remains, near a key level versus the greenback.
The USD/MXN pair broke to the downside during the US session and bottomed at 19.00, the lowest since last Thursday. Near the end of the session, it is hovering slightly above the lows with the negative tone intact.
An improvement in risk sentiment helped the Mexican peso that joined the rest of Latin American currencies in the rally versus the US dollar. “Financial market mood improved slightly today, after the US granted Chinese tech major Huawei a 90-day conditional waiver to continue doing business with US companies. The move provides a temporary respite for investors, unnerved by the ongoing escalation of US-China trade tensions, exacerbated by a parallel technology war, triggered by US officials ‘blacklisting’ Huawei’s earlier this week”, summarized analysts at BBVA.
The Mexican peso held to its gains even after US President Trump pointed at Mexico in Twitter. “I am very disappointed that Mexico is doing virtually nothing to stop illegal immigrants from coming to our Southern Border where everyone knows that because of the Democrats, our Immigration Laws are totally flawed & broken...”. Minutes later added that “Mexico’s attitude is that people from other countries, including Mexico, should have the right to flow into the U.S. & that U.S. taxpayers should be responsible for the tremendous costs associated w/this illegal migration. Mexico is wrong and I will soon be giving a response!”
More losses ahead?
The USD/MXN is about to post a daily close below the 20-day moving average and also under a key short-term uptrend line. That said, the outlook now appears to favor more losses ahead. The immediate support is the 19.00 area and a break lower should lead to a decline to 18.90, the strong barrier that protects the 2019 low at 18.74.
A recovery back above 19.05 could remove some of the negative momentum. The greenback needs to rise firmly above 19.15 to regain the initiative.
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