- The Mexican peso resumes its decline against the dollar.
- USD/MXN is likely to continue rising as long as it is above 20.70.
- USD/COP and USD/CLP hit all-time highs.
After a two-day correction, the USD/MXN resumed the upward path and jumped to 20.78, matching the July high. A stronger US dollar overall buoyed the pair on Monday as risk aversion prevails.
On Wall Street, the Dow Jones fell 0.38% and the Nasdaq fell 2.01%. US yields are down sharply as demand for Treasuries strengthens as investors seek safety.
Emerging markets under pressure
Stocks also fall in emerging markets. Mexico’s IPC falls 0.51% and Brazil’s Bovespa plummets 1.70%. Among currencies, the Chilean peso and the Colombian peso reach a new historical low. USD/CLP traded above 1,000 and USD/COP above 4,500 for the first time. USD/BRL (Brazilian real) rose 1.78% to 5.34.
The negative global growth outlook and rising interest rates are helping the dollar continue to rise against emerging market currencies, including the Mexican peso.
USD/MXN is testing the July high and as long as it holds above 20.70 further gains seem likely. Next resistance is at 20.90, last defense at 21.00. On the other hand, a pullback below 20.45 would ease the upside pressure.
Technical levels
Source: Fx Street
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