- Emerging market currencies rise sharply against US dollar, Mexican peso lags.
- USD/MXN heads for the lowest close in almost a month.
The Mexican peso was rising modestly against the US dollar on Wednesday supported by a decline of the greenback and by a rally in emerging market currencies. The peso is the weakest today among EM but over the year so far, still is the top performer.
The South African rand, the Turkish lira, the Argentinean peso and the Brazilian real are rising more than 1% while the peso gains marginally. The improvement in the mentioned currencies favored the Mexican peso but the slide of USD/MXN has been limited. The greenback remains supported by higher US yields. Today the 10-year yield hit a fresh 4-month high at 3.09%. The uncertainty around Canada-US trade negotiations is another factor that keeps the MXN limited.
Technical outlook: Bearish but....
The pair traded most of the day below the key support level of 18.80. It bottomed at 18.70 but then rebounded, approaching 18.80. USD/MXN is about to end the day in negative, but far from the lows. The short-term outlook remains bearish and while under 18.80 should signal more losses ahead, but the rebound from 18.70 is not a positive signal for the peso.
A firm recovery back above 18.80 would remove some of the short-term pressure. A break above 19.00/05 should signal a temporary bottom. The next strong resistance is seen at 19.15.
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