- The Mexican peso loses momentum across the board on Wednesday.
- USD / MXN accelerates after breaking 20.50, looks towards 20.65.
The USD/MXN it rebounded from the 20.00 area and rose to 20.61, reaching the highest level since Friday. It gained momentum after breaking above the 20.50 level and is holding on to daily gains, having the best day in two weeks.
The Mexican peso is among the worst performers across the board on Wednesday, correcting lower after rising sharply during the previous days. Wall Street prices are mixed. The MXN lost strength as the rally in equity markets slowed.
Furthermore, some internal factors could have been affecting the Mexican peso. The latest data continues to point to a slowdown in economic activity, and inflation in October rose to the highest level since mid-2019. On Thursday, the Bank of Mexico will announce its decision on monetary policy. A rate cut is expected, but the room for maneuver has narrowed amid rising inflation. On the other hand, the appreciation of the Mexican peso in the last two months offers a positive argument for those members who wish to cut rates.
From a technical perspective, the USD / MXN still has a dominant bearish bias. Although in the very short term, the US dollar appears stronger. If it remains above 20.50, it will probably test the next resistance at 20.65; Above the next is seen at 20.85. On the other hand, 20.25 is the immediate support; a break to the downside would expose the 20.00 zone.
Credits: Forex Street
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