- The bearish tone prevails in the USD / MXN, the fall seems limited by 19.95 / 20.00.
- MXN is not among the best performers on Wednesday before Banxico.
The USD/MXN it is trading modestly lower on Wednesday and continues to push towards the critical short-term support of 19.95 / 20.00. The 20- and 55-day moving averages are placed in that zone that contains horizontal support and is considered a psychological level.
A break below 19.95 could lead to further losses in the very short term and volatility as well. A close below would point to the next support at 19.75. If the USD / MXN manages to stay above 20.00, it could bounce. Immediate resistance stands at 20.15, followed by 20.30.
The Mexican peso has been rising since last Friday against the US dollar. It failed to strengthen further during the last session and is now lagging behind other emerging market currencies, probably because the USD / MXN reached strong support at 20.00.
On Thursday, the Bank of Mexico will announce its decision on monetary policy. The central bank could cut the key rate by 25 bps to 4% or remain on hold. The result should not have a significant influence on the MXN that is more correlated with global risk sentiment.
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