- Mexican peso and emerging market currencies under pressure amid risk aversion
- The USD / MXN has a potential double bottom near 20.85, increasing bullish risk.
The USD/MXN It is rising for the third day in a row Wednesday after accelerating, triggered by a rally in the US dollar against emerging market currencies amid risk aversion.
On Wednesday, the USD / MXN hit a high of 21.36 and fell back. It is testing the 20 day moving average which is around 21.30. A consolidation above would strengthen the dollar’s rally.
A pullback below 21.20 could suggest that the Mexican peso could again test key support at 20.80 / 85 which, if broken, would clear the way for further losses, without much support until 20.30.
In a broader perspective, there is a potential double bottom at 20.83. If the bullish momentum remains, a possible target is seen at 21.90. Above the critical level is 22.50 which should limit the rise, but if it breaks it would leave the Mexican peso vulnerable to significant losses.
Daily chart
Credits: Forex Street
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