• Emerging market currencies extend their weekly losses on Friday.
• US dollar remains firm on risk aversion, DXY rises 0.65%.
• USD/MXN tests critical resistance contained by the 100-week SMA.

The U.S. dollar rose against emerging market currencies on Friday, extending weekly gains fueled by global concerns over growth prospects and central bank rate hikes. the mexican peso it is one of the worst performing currencies.

The USD/MXN jumped to 20.46 on Friday, reaching the highest level in two weeks. It then pulled back to the 20.30 level. Volatility is likely to remain elevated as panic continues to drive price action.

After a brief pause, USD/MXN resumed gains on Friday, adding weekly gains. It started rising from 20.05 (20-day SMA). The rise found resistance at the strong 20.45 barrier that contains the 100-week SMA. A consolidation above it should point to more gains. The next strong resistance is at 20.70.

fear almost everywhere

On Wall Street, the main indices are in the red but off the lows. Bond yields have fallen sharply, reflecting risk aversion and lower expectations of monetary tightening. US economic data showed a larger-than-expected decline in ISM manufacturing in June that fueled recession fears.

Despite the slowdown in activity, high inflation is putting pressure on the Fed and other central banks to aggressively tighten monetary policy. Higher rates are often a negative for emerging markets.

USD/MXN weekly chart

Technical levels