USD/MXN retreats after reaching 5-month highs
|USD/MXN printed a fresh 5-month high at 19.15 before pulling back under 19.00. The pair is now down for the day as it trades at 18.95 but the Mexican peso still remains under pressure across the board.
During the last month, the peso is the worst performer among emerging market currencies. Concerns about the outcome of the negotiations of the North American Free Trade Agreement weigh on the Mexican peso. It dropped sharply during the fourth round of talks. Investors are worried about a potential break-up of the NAFTA.
Technical outlook
USD/MXN has been rising constantly since September 25, gaining 7.05%. Yesterday it posted the highest close in five months and traded above 19.00 for the first time since May 18.
Despite the retreat of the last hours, Momentum remains bullish although many indicators are at extreme overbought levels. The area around 19.00 should be a strong resistance. If the pair holds on top, an extension of the rally seems likely. Potential targets above are seen at 19.15, 19.30 and 19.40.
The immediate support could be seen at 18.90 (weekly low), followed by 18.85 and 18.67 (Oct 12 low). Below 18.85 the US dollar could lose strength, favoring some consolidation, but the overall bias will continue to point to the upside.
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