- Mexican peso remains strong against the dollar and begins to firm below 20.00.
- The dollar tries to recover ground but continues with a negative tone.
- Fall in stock markets could endanger MXN rally.
USD/MXN is falling for the seventh day in a row. It recently bottomed out at 19.87, the lowest level in almost a month. The negative tone remains firm although the climate in the equity markets is worsening.
on wall street the Dow Jones loses 1.23% while the Nasdaq 1.80%. If the mood continues to worsen, the Mexican peso could find it difficult to extend the rises against the dollar.
The green ticket maintains a correction in the market. Treasury bond yields threatened to rise but have reversed the trend which took momentum from the dollar. With no impactful economic data on Wednesday, the focus will remain on equity markets.
The Fed’s tightening expectations and the recent tensions in the financial markets had a limited influence on the USD/MXN, which is trading very close to the low of the year.
Should it firm up well below 19.90, the pair would head lower towards 19.80. This is the latest support for the 2022 bottom at 19.72. Technical indicators continue to point south, giving support to the Mexican peso.
A rebound above 20.05 would relieve bearish pressure. Then follows the 20-day moving average at 20.22. Critical resistance is found at 20.45, which capped rallies in April and May, a break of that area would enable further rallies.
Technical levels
Source: Fx Street
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