- The US dollar jumps up and then makes a full pullback.
- Mexican peso gains on risk appetite. Banxico’s decision will be known on Thursday.
- USD/MXN upside was capped at 20.45, testing the 20-day SMA.
The USD/MXN rose to 20.46 after the release of US inflation data, reaching the highest level in a week. Then, amid a general US dollar reversal, it pulled back all the way and hit a fresh daily low at 20.21, slightly above the 20-day simple moving average (SMA).
The 20 SMA at 20.20 is the immediate support level and a break down should clear the way for a test of an uptrend line at 20.08. Below the line, there is not much support until the May low at 19.99, also a critical horizontal level.
The daily RSI and Momentum turned south suggesting some strength for the Mexican peso which would be confirmed by a daily close below 20.20.
If USD/MXN sustains above 20.25, a retest of 20.45 would be on the table. The area around 20.45 also contains the 200-day SMA. A consolidation above should clear the way for further gains above the 20.50 horizontal resistance. The next significant barrier is seen at 20.70.
USD/MXN daily chart
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Technical levels
Source: Fx Street
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