- USD/MXN attempts to break recent range higher.
- Closing above 20.20 would enable more raises.
- Fall in stock markets, rise in Treasury bond yields strengthens the dollar.
USD/MXN started a run to the upside four hours ago and climbed from 20.02 to 20.17, reaching the highest intraday level since September 30. The pair remains above 20.10 and continues to test the upper limit of a sideways range that has prevailed for several days.
The Mexican peso lost momentum against the dollar, before a general strengthening of the latter. The combination of rising Treasury yields with various tranches reaching multi-year highs, and falling stock prices on Wall Street, is lending support to the greenback.
Dollar gains are broad based against emerging market currencies. The Mexican peso is far from the worst and still remains in the recent range. In case the USD/MXN confirms the break of 20.17/20.20, an extension of the advance would be expected. The next resistances are at 20.25 and then at 20.45.
In case the USD/MXN returns below 20.10, then a continuation of the lateralization between 20.15 and 19.95 would be expected. The Mexican peso would be strengthened on a break below 19.95, which would expose the next key support at 19.80.
Technical levels
Source: Fx Street
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