- The Mexican peso fails to break key level against the dollar and reverses direction.
- USD/MXN with support above 19.75, heads back to 20.00.
- The dollar gains momentum against emerging currencies before the drop in commodity prices.
The USD/MXN went from trading at lows since Thursday at 19.75 in the European session, to rise to 19.97, where it is trading prior to the American open. The rise was fueled by a stronger dollar against commodity-linked currencies.
The fall in the price of raw materials weakened the group of emerging currencies, among which is the Mexican peso. The worst performer is being South Africa. Against G10 currencies the dollar has gained momentum in the last hour. The DXY trades above 101.00, at a maximum in two years, supported by the rise in Treasury bond yields.
Market focus is on news from Ukraine, commodity prices, US bond prices and first quarter corporate results.
With regard to data, a higher than expected rise in both building permits and housing starts in March was known in the US. In Mexicothe inflation data for mid-April will be published on Friday, being the key number for the week.
Looking at 20.00
ANDThe strong rebound of the USD/MXN if sustained above 19.90, could lead to a new test of the 20.00 area, which is the level to beat. In the event of a clear confirmation above, further gains in the pair would be expected, with a possible target at 20.20, with intermediate resistance at 20.07.
In the opposite direction, 19.90 is once again a support to watch, followed by 19.75, before the March low of 19.72.
Technical levels
Source: Fx Street
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