- USD/MXN jumps almost 4% as Dow Jones tumbles more than 6%
- Mexican peso and South African rand, the worst performers in the world.
The USD/MXN jumped on Thursday and rose from 21.85 to 22.76, reaching the highest level since May 22. So far, it is the worst day for the Mexican peso in at least two months. Risk aversion across global markets weighed on emerging market currencies.
The Mexican peso and the South African rand were the worst performers in the world, falling around 4% versus the greenback. In Wall Street, the Dow Jones dropped more than 6%, turning negative for May.
A sharp correction is taking in place in Wall Street that is also affecting emerging market currencies. The correlation between USD/MXN is strong at the moment. So, if the current decline in US stocks continues, the Mexican peso will likely remain under pressure.
Technical outlook
The rally of the Mexican peso has probably ended, with USD/MXN back above the 20-day moving average, and after Thursday’s rally. Only a pullback in the short term back under 22.00 would suggest that another test of the base at 21.45/50 is possible. On the upside, the next resistance stands at 22.90, followed by 23.20 and 23.55.
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