- The Mexican peso extends its recovery amid improving risk sentiment.
- USD/MXN falls for the second day in a row.l
- Key support at 20.30/35, dollar strengthens above 20.45.
Emerging market currencies rose for the second day in a row on Monday, amid a global improvement in market sentiment. Stability in US yields and rising commodity prices offer relief to riskier currencies such as the Mexican peso.
USD/MXN reached a high above 21.00 last week, levels not seen since March. It failed to hold above 21.00 (nor did it post a daily close above 20.90) and initially fell back to 20.60. On Friday, it broke down and on Monday it sudoo at 20.32, close to the 20-day SMA.
During the American session, USD/MXN is bouncing off the key support zone around 20.33. If it moves above 20.45 again, the Mexican peso would lose strength, opening the doors to a test of 20.70, which is once again a critical resistance.
The pullback from the monthly highs so far represents a correction in the USD/MXN. The short-term bias remains bullish. A consolidation below 20.45 would keep the upside limited. A close below 20.22 could change the short-term trend to neutral.
USD/MXN daily chart
Source: Fx Street
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