USD/MXN rises after three-day slide, holds above 19.50
|- Emerging-market currencies modestly lower versus US Dollar on Monday, despite higher equity prices.
- Mexican peso holds bullish tone versus Greenback but momentum eases.
The Mexican peso dropped against the US Dollar on Monday, after rising almost 2% over the previous three trading days. The USD/MXN pair rose to 19.59 during the American session reaching the highest intraday level and then pulled back.
As of writing it trades at 19.56, modestly higher for the day, ending a three-day streak of declines when it dropped from four-week highs at 19.86 to 19.48. The slide of the US Dollar across the board was the key driver behind the drop in USD/MXN. An increase in rate cut expectations from the Federal Reserve weakened the dollar.
“A Fed rate cut by the end of October is widely expected by financial markets, despite the resilience of U.S. employment (73%). Separately, Fed Chairman Powell said the US economy is facing some risks, but in general terms it is in a good place, while he reiterated Fed’s commitment to keep the US expansion as long as possible,” explained BBVA analysts.
On Monday, emerging-market currencies failed to benefit from higher equity prices. Gains were modest ahead of the resumption of trade talks between high level US and Chinese officials.
USD/MXN Levels to watch
On the upside, the immediate resistance is seen at 19.60 followed by 19.67 (previous critical support) and 19.74. While on the downside, 19.45/50 is the key short-term support, a break lower could open the door for a slide toward 19.30.
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