- Dollar with mixed results prior to the Fed’s decision.
- US central bank could raise rate by 75 basis points.
- USD/MXN reaches the 20.70 zone.
USD/MXN is rising again on Wednesday, albeit not making new intraday highs in weeks. The cross reached as high as 20.69, the highest level since mid-March. Volatility is expected to continue.
Looking at the Fed
In the US, economic data were released that were below expectations (retail sales and manufacturing Empire) but the focus is on the Federal Reserve meeting.
At 18:00 GMT the Fed will announce its monetary policy decision which is expected to be a hike of 50 or 75 basis points. In the run-up to this meeting, expectations of a more aggressive rise were rising, which pushed up Treasury bond yields and also the dollar.
The foregoing, added to the sharp fall in the equity markets, was the factor that guided the rise of the USD/MXN. The pair went from lows in more than a year to highs in months in a few days.
At the moment the resistance area at 20.70 has held back the advance. It is a strong area, which if broken would enable further rallies, with a target of 20.90. If we continue, a test at 9:00 p.m. would be expected.
Now the strong support has moved to 20.50. A drop below would ease the current upside pressure. While below the next support level can be located around 20.25.
Technical levels
Source: Fx Street
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