- Mexican peso falls against the dollar for the first time in a week.
- USD / MXN maintains a downtrend and remains firm below 20.00.
The Mexican peso erased the day’s gains against the dollar after trading at the highest level since late January. USD / MXN fell to 19.78, then climbed to resistance at 19.90. It is trading around 19.87, rising for the first time in a week.
The correction in the stock markets, in the price of oil and a recovery in the dollar, favored the rebound of the USD / MXN from the new lows. Wall Street futures point to a negative open. WTI’s barrel is up just 0.20%, away from the highs. For its part, the dollar is supported by the rebound in Treasury yields. The DXY managed to return above 91.00.
MXN between technicals and fundamentals
The USD / MXN technical outlook has a clear bearish bias. After bouncing near monthly lows in the 19.75 area, it is trading at 19.85, but with a clear trend. Below 19.70, the next strong support is at 19.50 / 55, which is an important barrier. If this containment zone gives way, more weakness would be expected ahead, with an initial target at 19.30 and with the possibility of extending to 19.10.
On the fundamental side, the positive tone in stocks is supporting the Mexican peso and this appears to be necessary to extend the declines. The mid-term elections in Mexico and the possible need for US financing for future plans may limit the rate of appreciation of the MXN in the coming months.
Technical levels
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