- Equity markets fail to confirm rebound.
- The dollar strengthens after the beginning of the American session.
- USD/MXN with bullish bias, targets 20.50.
USD/MXN is trading at 20.31, the daily high, after being rejected from levels below 20.20 hours ago. The strength of the dollar is the key behind the rise of the pair.
Regarding data on Tuesday, retail sales in Mexico they showed a rise of 0.8% in February, higher than the 0.7% expected; Compared to a year ago, the advance was 6.4%.
In the US, a rise in requests for durable goods of 0.8% was known in March, below expectations, but with an upward revision of previous figures. Another report showed a higher-than-expected rise in home prices in February.
The dollar was not affected by the data and after the opening of the American session it gained pace throughout the market, further driven by the deterioration in the equity markets. Emerging market currencies manage to soften the decline in part due to the moderate rebound in commodity prices.
The setback in treasury bond yields it is not playing against the dollar in the context of risk aversion. The 10-year rate is at 2.74% and the 30-year rate is 2.85%, the lowest levels since April 14.
The Mexican peso has not been able to cut a negative streak against the dollar, although for the moment it is avoiding sharp losses. USD/MXN short-term bias remains bullish, with strong resistance ahead at the 20.50 area where horizontal resistances converge along with the 200-day moving average. Breaking that level could lead to more raises.
In the opposite direction, relevant short-term support can be seen at 20.15, and then 20.07 appears, before the 20-day moving average at 19.99. A close below this latest level would remove the bias to the upside.
Technical levels
Source: Fx Street
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