- Second day of gains on Wall Street weighs on the USD/MXN.
- The Mexican peso’s upside potential seems limited in the current environment.
- Mixed US data on Thursday, next: NFP on Friday.
The USD/MXN is rising modestly on Thursday, hovering around 20.66 thanks to a mixed US dollar. The dollar is supported by a cautious tone in the financial market as the crisis in Ukraine continues.
Wall Street indices are rising for the second day in a row, keeping the Mexican peso’s losses limited. Another wave of risk aversion could send USD/MXN towards 21.00. Crude oil prices are having an extremely volatile session. The WTI barrel reached the highest level in more than a decade above 116.00 and then fell back to 107.69.
US economic data was mixed. Initial jobless claims fell to the lowest level in eight weeks, while the ISM Services PMI unexpectedly fell to 56.5 from 59.9. The services employment component of the ISM fell to 48.5 from 52.3 and Price Paid rose to 83.1. The official US employment report is due on Friday.
Short term outlook
The USD/MXN maintains a bullish tone, although on Wednesday it did not achieve a daily close above the 20.70 area. If the dollar manages to rally back up and consolidate above 20.70, it would clear the way for a test of the next critical resistance at 20.85/90, the last defense at 21.00.
On the other hand, the 20.45/55 band currently offers support for USD/MXN. A break down would nullify the short-term negative bias.
Technical indicators show that RIS is moving north, supporting the upside, while Momentum is flattening still in positive territory.
USD/MXN daily chart
Additional technical levels
Source: Fx Street
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