- Mexican peso loses strength due to a fall in the stock markets.
- The dollar recovers from post-Fed declines supported by advancing Treasury bond yields.
The USD / MXN is rising on Thursday after the sharp drop on Wednesday. The cross’s retracement found support at 20.25 (a four-week low) and hit highs for the day at 20.58 on Thursday, before falling back to the current level of 20.45.
Wednesday’s signal from the Federal Reserve that interest rates will stay at current levels for as long as necessary triggered a pullback in Treasury yields and the dollar. But on Thursday, bonds resumed their downward slope, strengthening the dollar.
The greenback is recovering much of the losses it took on Thursday, especially against the G10 coins. The dollar index is trading at 91.80, having bottomed in Thursday’s Asian session at 91.27. The reference rate to 10-year Treasury bond rises more than 6% and it stands at 1.75%, the maximum since January of last year.
Another negative factor for the Mexican peso is that Wall Street futures point to a negative opening, which reduces demand for emerging markets and currencies.
From a technical point of view, the USD / MXN halted the decline in a trend line that supports the underlying bullish view.. Thursday’s rebound has so far failed to rise above 20.50. A confirmation above 20.50 / 60 would give the dollar more power to extend the bullish run, with the next resistance being at 20.80.
Technical levels
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