USDMXN: Peso regains poise as S&P 500 futures rise

MXN picks up a bid as the US stock futures signal risk reset.
Mexico's decision to reopen the economy is likely adding to upward pressure around the Peso.

Omkar Godbole FXStreet Contributor

The USD/MXN is feeling the pull of gravity for the third straight day with the Peso drawing bids amid signs of risk reset in the US stock futures.

The currency pair is currently trading at 23.61, representing a 0.24% decline on the day. The bounce from Tuesday's low of 23.4467 ran out of steam at 23.75 during the early Asian trading hours.

MXN's strength could be associated with the 0.5% rise in the S&P 500 futures. Essentially, futures are indicating that Wall Street could reverse or at least regain a part of the losses seen on Tuesday. Stocks fell on Tuesday, boosting demand for the safe-haven dollar after scientists raised questions over the positive test results of the US-based Moderna's coronavirus vaccine.

Apart from the uptick in the stock futures, MXN seems to be benefitting from the optimism surrounding the reopening of its economy. Mexico issued guidelines on Monday for restarting operations in the automotive, mining and construction sectors, despite the rising death toll from the coronavirus pandemic.

Looking forward, the Mexican peso could continue to track the optimistic turn in market sentiment. Also, action in oil prices could influence the MXN. At press time, the West Texas Intermediate crude's front-month contract is trading 0.16% lower on the day at $31.90 per barrel.

The black gold has rallied by over 200% since bottoming out below $10 last month. Hence, a chart-driven pullback cannot be ruled out. That may weigh over MXN.

Technical levels

1. R3 24.1659
2. R2 23.986
3. R1 23.8105
PP 23.6306
1. S1 23.4551
2. S2 23.2752
3. S3 23.0997

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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