- Mexican peso loses strength due to less optimism in the markets.
- USD / MXN continues with a dominant downward trend, although neutral in the short term.
The USD / MXN rose to 10.20 at the start of the American session, reaching the highest level in a week but quickly fell back to the 20.00 area, where it is trading, with a slight rise for the day.
The emerging currencies do not show the strength of days ago and operate in mixed terrain against the dollar. The Mexican peso is among the weakest, but without showing significant falls.
Demand for emerging market assets was hurt after Monday’s setback on Wall Street. Today the markets are trying to regain ground, which added to the persistent weakness of the dollar on Tuesday, limits the increases of the USD / MXN.
What happens to the equity markets may be decisive for the next runs of the USD / MXN. For the Mexican peso to recover its positive tone, it needs the VIX (volatility index) to fall again and the shares return to the upward path. Even with a retreating dollar, if stocks in the world recede, emerging market currencies are unlikely to hold up.
From a technical point of view, the overall outlook for USD / MXN remains bearish, although the short-term moment is neutral. The price tested the 19.70 support on Monday, but rebounded. To trigger more pullbacks, a firm break to 19.70 has to be made, which could lead to 19.45 / 50. In the opposite direction, a confirmation over 20.20 would anticipate more increases in the dollar.
Technical levels
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