USD/MXN extends losses below 19.60, to lowest since October
- A rally in BRL, boosts Mexican peso and other Latin American currencies.
- USD/MXN continues with the bearish outlook, signals more losses ahead.
The Mexican peso is rising against the US dollar for the fourth trading day in-a-row. USD/MXN broke below 19.60, a critical support levels and dropped to 19.54, the lowest intraday low since October 29. Near the end of the session, it is holding around the bottom, validating daily losses.
The pair continues to move to the downside. Earlier today, the risk aversion triggered a move to the upside in USD/MXN, but it found resistance at 19.70 and lost momentum. It reversed to the downside, with a negative tone, enough to break 19.60.
The Mexican peso strengthened following a recovery in equity prices and also in crude oil prices. Another boost came from the Brazilian real. The mentioned currency is the top performer following the inauguration of Jair Bolsonaro. Market reception of his first words as President of Brazil was positive.
Positive trend despite risk aversion
The trend in USD/MXN continues to point to the downside in the short-term. The decline in equity markets worldwide has not been enough to change the direction of the pair. It is expected that a negative financial environment is not favorable for MXN, but during the last weeks, Mexican bonds recovered.
In December, Andres Manuel Lopez Obrador administration move forward to reach a deal with bondholders of the airport construction trust and also the 2019 budget, were seen as a positive developments. On Thursday, the minutes of the last meeting of the Bank of Mexico will be released. At that meeting, it rose the key rate to 8.25%, the highest in 10 years.
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.
