- The Mexican peso is favored by better weather in markets.
- The dollar is still in the process of a marked downward correction.
- USD/MXN affirms below 20.00, which could anticipate further declines.
USD/MXN is falling for the third day in a row and is nearing Monday’s low, starting to firm up below 20.00. The recovery in the equity markets and in raw materials helps the Mexican peso.
Since hitting highs since early August last week above 20.60, USD/MXN has trended lower, reaching as low as 19.95 yesterday, the lowest since September 23rd.
The losses of the pair have as main factor the dollar weakness. The reversal began even with a cautious climate in the stock markets and accelerated this week with the strong rise in the equity markets. The dollar index is at its lowest in almost two weeks below 111.00. At the same time Treasury bonds rallied.
Among the emerging currencies, the peso is not one of the ones that has risen the most these days. Those of Latin America lead with the Chilean peso and the Brazilian real. The latter rose more than 5% on Monday after Sunday’s presidential election.
If the recovery in the stock markets continues, the USD/MXN could continue to be affected negatively. Should it firm below 20.00, the focus will turn to the key support at 19.80. In the opposite direction, a return above 20.20 could restore strength to the greenback, enabling a retest of resistance at 20.45.
Technical levels
Source: Fx Street
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