USD/MXN hits three-week lows under and rebounds back above 22.20
- USD/MXN testing critical support at 22.20 that protects 22.00.
- Mexican president presents a reform to the pension system.
The USD/MXN pair dropped to 22.18, reaching the lowest level since July 6 and then rose back above 22.20. As of writing, it trades at 22.23 falling for the third day in row and pressuring a critical support at 22.20.
Price action in USD/MXN continues to be driven by a weaker US dollar across the board. The improvement in risk sentiment boosted the demand for riskier assets. Hopes about a COVID-19 vaccine and the EU recovery fund, are among the factors keeping the rally going.
The Brazilian real is the best performer with USD/BRL falling 1.30%, followed by the Russian ruble with USD/RUB down 0.80%.
In Mexico, President Andrés Manuel López Obrador announced a pension reform project. So far the reaction has been positive. Mexico’s IPC is up almost 1% and the MXN printed fresh highs versus the dollar during the last hour.
Levels to watch
The USD/MXN is testing the 22.20 area. A consolidation below would clear the way to more losses, targeting 22.00/05. Below support levels are seen at 21.90 and 21.55. If the pair rebounds above 22.25, the bearish pressure should ease favouring a bullish correction. The key resistance is seen at 22.55/65 (20 and 55-DMA, horizontal levels and downtrend line): a close above would clear the way to further gains and a test of 23.00.
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.
