- Stock rebound on Wall Street adds downward pressure to USD/MXN.
- Emerging market currencies firm against the dollar.
- USD/MXN could have the lowest weekly close in a year.
USD/MXN falls for the second day in a row and trades at the lowest level in a month. The bearish technical bias remains firm and the pair seems to be aiming for this year’s low. It reached the lowest price since April 19 at 19.84 and remains close to that level at the start of the American session.
The better mood in the markets is supporting the demand for riskier assets and favors the Mexican peso. Wall Street futures rise 1% on average and in Europe the main stock markets climb 1.50%.
Global stocks rebound and trim losses in what was another bad week. By contrast, actions in Mexico accelerated the recovery. The IPC of the Mexican stock market is on its way to closing for the second week in a row with gains, with a rise of more than 3%.
Technically, despite the continuation of the decline, the USD/MXN still shows no signs of extreme overselling on the daily RSI. It is asserting itself below 19.90, which if it materializes would enable a test of 19.80 and the current year’s low reached in April at 19.72.
From bounce and return above 19.90, the dollar would give an important signal and could mark the beginning of a temporary correction, as well as a possible very short-term bottom. The negative bias is expected to prevail if below 20.20 (20-day moving average).
Technical levels
Source: Fx Street
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