USD/MXN jumps to 20.50 as Wall Street plunges
|- Risk aversion intensifies across financial markets.
- Treasuries also decline, US yields at multi-year highs.
- USD/MXN break key resistance levels, tests 20.45/50 area.
The USD/MXN is rising sharply on Monday as global markets tumble. The pair jumped from below 20.00 to 20.50, hitting the highest level since May 2. It is having the biggest daily gain in months boosted by risk aversion.
Latin American currencies are the worst performers on Monday. The USD/CLP (Chilean peso) gains 2.50%, followed by the USD/BRL (Brazilian real) up 2.25% and the USD/COP (Colombian peso) rises 2.20%. The USD/MXN rises by 2.30% and is about to post the highest close in a month.
The rally is testing the 20.45/50 resistance area. It is a zone that capped the upside in April and May. A break higher should trigger more gains targeting initially the 20.70 area. While under 20.45, losses in USD/MXN seem limited, with the new support levels seen at 20.15 and 20.00.
If the current mood in financial markets persists, the Mexican peso will likely remain under pressure. A recovery could limit the upside.
The economic calendar is clear in Mexico for the current week. The key event will be the Federal Reserve meeting. On Wednesday the FOMC will announce its decision. A 50bps rate hike is expected, although some analysts consider the possibility of a larger hike after the latest CPI numbers.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.