USD / MXN finds support at 20.50, remains bullish

• Mexican peso affected by caution in global financial markets.
• USD / MXN with support at the 20.40 area.
• Wall Street regains ground after Monday’s crash.

USD / MXN is trading in slightly positive territory on Tuesday, despite the recovery in stocks on Wall Street. The price recently fell to 20.49, but rebounded to 20.56, continuing in the recent range.

In recent days, the USD / MXN has been moving between 20.40 and 20.70, validating the rise at the end of September. The technical bias continues to be upward, although some indicators favor the continuity of the consolidation mode.

EIn the event of a confirmation of the crossing over 20.65 / 70, a prolongation of the advance would be expected with a target around 20.95; and above and a test at 21.00. In the opposite direction, strong initial support appears at 20.40. In case of losing this level, 20.20 will enter the scene. Between the latter and 20.05, several dynamic supports (key moving averages) and static (horizontal levels) appear, which would be expected to contain the lows favoring a rebound.

So that the USD / MXN is weakened, equity markets need to regain lost ground. Also, another condition that can lead to that is a drop in Treasury yields. The 10-year rate is at 1.50%, rising on Tuesday, which favors the dollar and helped limit the USD / MXN declines.

In the coming days the focus will continue on the US data, the Treasury bond market, the debate on the legal limit of indebtedness, and the general climate in global stock markets. A deterioration in investor mood would be expected to create new pressures on emerging market assets including the Mexican peso.

Technical levels