USD / MXN falls to two-week lows below 21.00

• Mexican peso remains among the currencies that have risen the most this week.
• Better mood in markets continues to prop up the MXN.
• USD / MXN breaks below 21.05 and goes for 20.85 / 90.

The USD / MXN continues to decline and after breaking 21.15 it accelerated the decline and reached 20.90, the lowest level since November 22. The cross remains below 21.00, with a marked bearish tone and pointing to a relevant support level.

The drop has now put the focus on 20.85 / 90, which just two weeks ago was a key resistance. A fall below would leave the peso in a position to extend the rise, or validate recent gains. Below then appears as the next support level 20.65 and 20.50.

The dollar now has a first resistance at 21.05 and then at 21.20 and 21.30. A return above this last level could indicate that the correction of the Mexican peso has run its course, establishing a temporary floor. Then the next resistance appears at 21.50 / 55.

The boost for the Mexican peso comes from the better climate in the markets, as a result of less pessimism due to the Omicron variant of COVID. In addition, the rise in oil and technical factors further weakened the USD / MXN. The rebound in Treasury yields for now is not slowing the dollar’s decline against the Mexican peso.

On EE.UU. inflation data is expected on Friday, ahead of next week’s Federal Reserve meeting.

Standard & Poor’s agency maintained the credit rating of Mexico at BBB, with a negative outlook. The highlight of the week will also be that of retail inflation to be published on Thursday. The index would exceed 7% (annual).

Technical levels

USD/MXN