USD/MXN suffers worst week since January 2017 amid a stronger Mexican peso
|- MXN among top performers across the globe over the week.
- USD/MXN lost 3% and dropped to 20.00 as Banxico rose rates and on US Dollar retreat.
The Mexican peso gained almost 3% over the week against the US Dollar, having the best week in 17 months. The improvement in risk appetite, a rate hike, a correction of the US Dollar and some technical factors contributed to benefit the peso.
USD/MXN traded on Monday above 20.70 but it was already in a bearish correction that started a week ago following a reversal from near 21.00. It fell every day of the week, and accelerated on Friday, after a rate hike in Mexico and a rally in crude oil prices.
Bank of Mexico increased the key rate by 25bp to 7.75%, the highest in a decade. The central bank reacted to the depreciation of the Mexican peso and after data singled that the slowdown in inflation eased.
Regarding crude oil, the WTI jumped 3.80% a barrel on Friday after the OPEC agreement, offering an extra support to the peso.
Near the end of the week, the pair was testing the 20.00 area, trading at the lowest since June 4, on it was to the sixth daily loss in-a-row. Despite the significant slide, it is still up for the month.
USD/MXN Levels to watch
To the downside, the immediate support is the 20.00 area. A break lower could clear the way to further losses. Supports are seen at 19.90, 19.70 and 19.45/50.
The pair is about to post the first close below the 20-day moving average since mid-April. If it holds above 20.00, some consolidation between 20.00 and 20.30 seems likely. Above 20.30, the next resistance could be seen at 20.45/50.
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