USD/MXN remains weak, testing key support at 19.45/50
|- Mexican peso modestly higher against US Dollar, holds positive bias.
- Greenback posts mixed results, on a quiet day for markets ahead of ECB meeting on Thursday.
The USD/MXN pair tested earlier today the 19.60 resistance area and then turned lower. It bottomed at 19.46, hitting a fresh three-week low but again failed to extend the decline and rose back to 19.50.
The bias continues to point to the downside, but so far it remains capped by a strong technical level. A weaker US Dollar contributes to limit any recovery. The improvement in risk sentiment across financial markets offered support to the Mexican peso, and also expectations of more rate cuts from the Fed.
Today not even higher US yields pushed the pair to the upside. From the top it reached two weeks ago, USD/MXN dropped almost 4%. The appreciation of the Mexican peso and the deceleration in inflation in Mexico, together with more easing from the Fed, leaves the door wide open to more interest rate cuts from the Bank of Mexico.
Testing 19.45/50 support
The pair is testing the 19.50/45 support area. A break lower would open the doors toward the next strong barrier seen at 19.30/35. If reach, a rebound from 19.30 would be expected.
On the upside, 19.60 is the immediate resistance to break for the US Dollar: a horizontal level and also the 20-SMA in four hours chart. Above the next resistance awaits at 19.70. A consolidation on top of 19.75 would remove the current bearish short-term bias.
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