- Rebound in the markets favor the Mexican peso.
- The dollar falls but continues with the trend in favor.
- USD/MXN with support above 20.20/25.
USD/MXN is declining modestly after two days of strong gains. The pair reached as high as 20.44 on Monday, the highest level since early August. On Tuesday it is correcting lower, although it is moving away from the lows.
After bottoming at 20.25, the USD/MXN bounced back and is trading at the 20.35 zone. The bullish tone remains firm in the pair, particularly if it continues above the 20.20/25 area..
On the upside it faces a first resistance area at 20.45. If it exceeds and asserts itself above 20.50, a bullish extension would be expected with a possible target at 20.70. Only a confirmation below 20.20 would alleviate the pressures.
The Mexican peso is helped on Tuesday by a modest recovery in equity and commodity markets. Anyway, this looks like a respite in the midst of turbulent days. Should declines and volatility return, the peso could come under pressure.
On Thursday, the Bank of Mexico will announce the monetary policy decision. After the Fed hike of 75 basis points and given the persistence of inflation in Mexico above 8%, very far from the target, Banxico is also expected to raise the rate by 75 points from 8.50% to 9.25%.
Technical levels
Source: Fx Street
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