USD/MXN Price Analysis: Mexican peso drops as Fitch downgrades Mexico to BBB-

USD/MXN surges to a one-week high.
Fitch downgrades Mexico to BBB-, outlook stable.
US Dollar remains on the front foot amid broad risk aversion.

Anil Panchal FXStreet

Early Thursday morning in Asia, global rating giant Fitch downgrades Mexico’s credit rating from BBB to BBB- with a stable outlook.

Following the news, the USD/MXN pair surged from 23.95 to 24.30, currently around 24.23, while also probing the weekly top.

Also contributing to the pair’s strength could be the US dollar’s strength amid a broad risk-off wave mainly driven by the rise in the coronavirus (COVID-19) fatalities, downbeat US data and fears of the global recession.

Furthermore, oil price weakness can also be counted as a positive for the pair due to Mexico's reliance on the energy industry. WTI dropped on Wednesday, currently pressured around $20.00, as a surge in the official inventory data from the US added weakness into the oil benchmark.

While portraying the risk-off, Wall Street closed in red and the US 10-year Treasury yields dropped 11 basis points to 0.635% by the end of Wednesday in the US markets.

Moving on, traders will keep eyes on the US economic docket and the virus updates for fresh impetus while oil catalysts will also have their effects on the pair.

USD/MXN forecasts chart

Following its break of 200-HMA, USD/MXN is currently rising towards 24.80. It’s worth mentioning that sellers will look for entry below 23.80.

Trend: Further recovery expected

Additional important levels

Overview
Today last price	24.2572
Today Daily Change	0.8659
Today Daily Change %	3.70%
Today daily open	23.3913

Trends
Daily SMA20	24.0339
Daily SMA50	21.4156
Daily SMA100	20.1963
Daily SMA200	19.8039

Levels
Previous Daily High	23.7578
Previous Daily Low	23.3885
Previous Weekly High	25.7809
Previous Weekly Low	23.3192
Previous Monthly High	25.459
Previous Monthly Low	19.1536
Daily Fibonacci 38.2%	23.5296
Daily Fibonacci 61.8%	23.6167
Daily Pivot Point S1	23.2673
Daily Pivot Point S2	23.1432
Daily Pivot Point S3	22.898
Daily Pivot Point R1	23.6366
Daily Pivot Point R2	23.8818
Daily Pivot Point R3	24.0059

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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