USD/MXN retreats after hitting weekly highs, consolidates around 20.50
|- USD/MXN pulled back after rising momentarily above 20.60.
- Outlook continues to favor the upside from a technical and fundamental perspective.
The Mexican peso managed to erase losses against the US dollar late on Wednesday, remains under pressure. The USD/MXN rose to 20.61, hitting the highest level in a week. The rally lost strength slightly below last week highs. The pair then pulled back.
Near the end of the day, trades at 20.50, around the same level it closed yesterday. Price action remained limited during the US session amid a holiday in the US. Elevated levels of volatility prevail in MXN assets.
The global risk aversion environment, lower crude oil prices, and domestic factors, continue to weigh on the Mexican peso. The new administration in Mexico continues to restore confidence that was damaged after the vote to cancel the ongoing construction of the new airport. Officials started negotiations with bondholders of the trust made to finance the construction.
USD/MXN Technical outlook
The trend in USD/MNX continues to point to the upside. The pair is showing difficulties in holding on top of 20.50, but any correction has been limited. If the pair consolidates above 20.50/55, it is likely to target 20.65/70. Above the next strong resistance could be seen at 20.90/21.00, at YTD highs.
On the flip side, the immediate support is located at 20.40. As long as the pair remains above 20.20, the upside pressure will stay intact. A break lower would be a positive development for the peso exposing 20.00. The next strong support is 19.60.
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