USD/MXN: Mexican peso, the best of the week
- Mexican peso gained more than 4% against the US dollar, having the best week in years.
- Leftist president-elect Andrés Manuel López Obrador’s tone calmed investors and boosted the currency.
The Mexican peso was the top performer over the week among the most-traded currencies, supported by easing fears about López Obrador policies. USD/MXN rose modestly on Monday and even reached 20.20; since then lost 5.75%.
On Friday the pair bottomed at 19.03, the lowest since early May. The area above 19.00 capped the decline and it was about to end the week hovering around 19.05/10.
From last month’s highs, USD/MXN fell 9.10%. Back then the currency approached 21.00 on a sharp rally that contributed to the decision of the Bank of Mexico to raise interest rates to 7.75%, the highest level since 2009.
Yesterday, the minutes of that meeting showed that Banxico could raise rates further. The central bank acknowledged a deterioration in the inflation outlook. The recent appreciation of the peso is likely to keep Banxico out of the trigger for the moment.
USD/MXN Levels to watch
The area around 18.95/19.00 is a key support and if the pair holds on top a correction seems likely. If it breaks lower, targets might be located at 18.75 and 18.60. To the upside, resistance levels might be seen at 19.15, 19.30 and 19.45.
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.
