USD/MXN: Mexican peso consolidates gains and erases yesterday’s losses
|- A relief from the Turkish crisis favored a correction in USD/MXN.
- The pair was about to end the day under 19.00, around the same level it closed on Friday.
The improvement in risk appetite among Emerging Markets boosted the Mexican peso against the US dollar. The USD/MXN yesterday hit the highest level in a month at 19.36 and today bottomed at 18.84. It rebounded from the lows during the US session but near the end of the session was back below 19.00, trading at 18.95, around the same level it closed last week.
The US dollar was higher versus the euro (1-year high), the pound and the yen while it was lower versus the Mexican peso, the Turkish lira, and the South African rand, among other EM currencies. The rebound of the lira helped improved the tone and weakened the demand for the greenback. Still, volatility remained high and tensions were still there.
Technical outlook
USD/MXN corrected today after rising sharply during three days in-a-row. The rally pushed the pair above key technical levels, changing the short-term tone from bearish to bullish. The positive momentum eased today but the short-term tone still points to the upside.
As of writing, USD/MXN was trading under 18.95, keeping the positive momentum limited. Below the next strong support area is 18.70: a daily close significantly below would signal that a possible top is in place, pointing to some consolidation in the range 18.75/18.45.
While above 18.70, the tone would favor the greenback but the upside is likely to remain limited while holding below 19.15. A break higher would target 19.30, above the next resistance is the 19.50 area.
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