USD/MXN Price Analysis: Rebound from five-day lows finds resistance at 22.35
|- Mexican peso losses strength versus the US dollar as Wall Street indexes pull back.
- USD/MXN still holds a bearish bias in the very short-term, but consolidation seems more likely.
The USD/MXN pair is hovering around 22.20, at the same level it closed on Monday. Earlier, it bottomed at 21.88, the lowest since last Thursday before turning to the upside as Wall Street moved off highs. It jumped to 22.35 before pulling back to 22.20.
The ups and downs in USD/MXN track what is happening with US stock indexes. Equity prices are higher by more than 2% but off highs. Market optimism eased following comments from Fed Chair Powell and after Beijing tightened lockdown measures after a new coronavirus outbreak. The retreat in markets weighed on emerging currencies that also pulled back.
Consolidation ahead for USD/MXN?
The pair is trading around the 20-day moving average, moving sideways. It was rejected on Tuesday from under 22.00, while to the upside it has been losing momentum near 22.80.
Considering that USD/MXN based at 21.45/50, a consolidation between 22.00 and 23.00 would seem likely as long as market sentiment does not shift significantly.
The critical level on the downside for USD/MXN is 21.45/50; a break lower should clear the way to more losses, targeting 21.30. While on the upside, above 22.90, the US dollar will likely strengthen to test 23.20.
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