- The Mexican peso recovers after the fall on Wednesday.
- USD/MXN remains bearish despite the negative climate in financial markets.
USD/MXN is trading around 19.90, erasing Wednesday’s rally. The Mexican peso returned to the area of monthly highs, despite the negative climate of the financial markets.
On Thursday Wall Street is trying to recover after having the worst day since June 2020. The bad moment in the markets took the USD/MXN on Wednesday to rise from 19.86, the low in almost a month, to rise to 20.07. Today he is giving back those gains and recently tested the recent flat.
The bearish technical picture remains, with the technical indicators still pointing lower, but with less strength than previous sessions. USD/MXN needs to break below 19.85 to enable further downside, and expose the April low near 19.70.
On the upside, resistance looms around 20.05, followed by 20.23, where the 20-day moving average is.. In the event of a close above 20.25, the Mexican peso would lose momentum.
The risk for the Mexican peso comes from the current climate in the financial markets. If the declines and volatility persist, the MXN’s upward path will encounter more risks and the possibility of strong setbacks.
On Thursday the declines in the USD/MXN are behind some weakness in the dollar, as Treasury yields decline favoring a DXY correction from year-highs. Emerging currencies and markets have not been hit so badly so far, due to declines in the main Wall Street indices.
Technical levels
Source: Fx Street
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