- l USD/MXN turns negative, after reaching weekly highs near 20.30.
- A recovery in market sentiment helped the Mexican peso during the American session.
- A consolidation above 20.20 is likely to trigger further gains.
Emerging market currencies recovered ground during the American session from multi-day lows. They remain under pressure, affected by the sharp decline in global stocks. The negative outlook for growth and the Fed’s monetary tightening weigh on currencies such as the MXN.
The USD/MXN reached a high of 20.26 on Thursday, the highest level in a week. Later, as the stock rallied, he backtracked, erasing the gains. Despite moving away from the highs, the outlook is tilted to the upside. On the first try, the dollar was rejected above 20.20. If it gets a daily close above, it could continue to go higher until the next resistance at 20.45. The 20.20 zone is reinforced by the 100-day simple moving average.
A decline to 20.00 should be seen as a normal correction after the rally from 19.80 to 20.20.
A decline below 20.00 and below the 20-day SMA should strengthen the Mexican peso, favoring an extension towards the weekly low at 19.81. The key support below is the 19.70 area which, if reached, could trigger a bounce.
USD/MXN daily chart
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Technical levels
Source: Fx Street
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