- The US dollar jumps against emerging market currencies amid a drop in commodity prices.
- Higher stock prices are not helping the Mexican peso.
- USD/MXN reverses sharply and spikes up from 19.75, above the 20-day SMA.
The USD/MXN rose sharply during the US session, rising from 19.75 to 20.07, the highest level in a week thanks to a stronger US dollar.
The dollar gained momentum against emerging market currencies as commodity prices fell. Gold fell from $1,980 to $1,950, silver fell from $25.75 to $25.10, and crude oil prices lost more than 3% over the past four hours.
Rising US yields are also helping the US dollar. The 10-year yield hit a high of 2.92% and the 30-year yield hit levels above 3.00% for the first time since 2019. DXY rose 0.10% to break above 101.00.
In Mexico, President Andrés Manuel López Obrador’s project to restore state control of the electricity sector failed. Regarding economic data, mid-month inflation data will be released on Friday. “Headline inflation is expected at 7.51% year-on-year vs. 7.29% in mid-March. If so, inflation would continue to move above the target range of 2-4%. Banco de México delivered the expected hike of 50 bps to 6.5% in March. The minutes showed a variety of views on further tightening, but suggested there is a consensus to continue raising rates at the current 50bp pace. The next policy meeting is on May 12 and another 50bp hike to 7.0% seems likely,” BBH analysts wrote.
technical perspective
The USD/MXN reversal from the strong support area of 19.75 deteriorated the outlook for the Mexican peso. If the pair manages to sustain above 20.00 (static resistance and 20-day simple moving average), further gains seem likely, targeting 20.20.
A drop below 20.00 over the next few hours should keep USD/MXN in the 19.75-20.00 range, favoring an extension of the consolidation bias.
USD/MXN daily chart
Technical levels
Source: Fx Street
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