USD/MXN extends slide to ten-day lows, eyes 19.30
|- Mexican peso points to further strength versus the greenback.
- USD/MXN head for the lowest close since November 19.
The USD/MXN pair is about to post the third consecutive loss, as it consolidates below key support levels. Technical factors, an improvement in market sentiment and an appreciation of Latin American currencies weakened the pair further.
Technicals matter
After being rejected again from above 19.60, the USD/MXN offered signs of exhaustion that were followed by a bearish correction. The pair today broke a short-term uptrend line and dropped below the 20-day simple moving average (SMA).
The pair bottomed at 19.33, the lowest level in almost two weeks and rebounded, but it held under 19.40 where the -now flat- 20-SMA stands. The mentioned level has become now a relevant resistance area, and as long as it remains below, risks will favor the Mexican peso. The next support level is 19.31, followed by the 19.23 area that protects a long-term uptrend line seen at the moment at 19.00/05.
Fundamentals too
Risk sentiment continues to be driven by the swings of the trade war. Today equity markets showed no significant changes as the deadline for higher US tariffs to imports from China approaches. On Friday, the official employment report is due and also markets will learn what the OPEC+ agreed.
Latin American currencies extended weekly gains and continue to recover as the situation in many countries shows some stabilization. The Mexican peso benefited but the critical situation seems far from over and could soon hit Latin American markets again.
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