- The dollar shoots up in the market due to a fall in the stock markets.
- Mexican peso remains under pressure and extends weekly losses.
- USD/MXN is facing resistance at the 20.20/25 zone.
USD/MXN continued to climb and reached 20.26, the highest level since August 10. It then pulled back slightly and is trading around 20.18, in positive territory for the day and confirming significant weekly gains.
The general rise in the dollar, added to the fall in the equity markets and the advance in the yields of sovereign bonds in the US and Europe. This context is adverse not only for the Mexican peso, but for most emerging market currencies.
The Dow Jones is falling 0.68%, while the Nasdaq yields 1.67%. In Europe, the main stock markets closed with losses of around 0.50%. The 10-year Treasury bond yields 2.97%, and the 30-year 3.21%.
The short-term outlook remains bullish in USD/MXN, and the indicators point to more rises. The key for now is what happens with the 20.20/25 zone, which is an important barrier that, if broken, would enable more raises. If it returns below 20.15, the dollar could lose momentum. Next support is seen at 19.98, followed by the August low at 19.80.
Technical levels
Source: Fx Street
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