USD/MXN breaks above 20.50, moves further away from 20.00
- Mexican peso loses momentum across the board on Wednesday.
- USD/MXN accelerates after breaking 20.50, looks at 20.65.
The USD/MXN resumed the rebound from the 20.00 area, and it climbed to 20.61, reaching the highest level since Friday. It gained momentum after breaking 20.50, and it is holding onto daily gains, having the best day in two weeks.
The Mexican peso is among the worst performers across the board on Wednesday, correcting lower after rising sharply over the previous days. Equity price in Wall Street area mixed. The MXN lost strength as the rally in equity markets eased.
Also, some domestic factors could have been affecting the Mexican peso. The latest data continues to point to a deceleration in economic activity, and inflation in October climbed to the highest level since mid-2019. On Thursday, the Bank of Mexico will announce its decision on monetary policy. A rate cut is expected, but the room for maneuver has been reduced amid rising inflation. On the other side, the appreciation of the Mexican peso over the last two months offers a positive argument for those board members that would like to cut rates.
From a technical perspective, the USD/MXN still holds a dominant bearish bias. Although in the very short-term, the US dollar looks stronger. If it remains above 20.50, it will likely test the next resistance at 20.65; above the next one is seen at 20.85. On the flip side, the 20.25 is the immediate support; a break lower would expose the 20.00 zone.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
