- The dollar rises in the market before the Federal Reserve.
- USD / MXN over 20.80, with a bullish outlook, although with resistance ahead.
The USD / MXN is picking up the gains on Wednesday after Tuesday’s pullback and is trading above 20.80, close to yesterday’s high. The advance is driven by a general appreciation of the dollar, which also occurs against emerging market currencies. The equity markets are mostly down, giving more push to the demand for the dollar.
The dollar is gaining momentum on all fronts awaiting the announcements from the Federal Reserve and following the ADP employment report. In the American afternoon, it is estimated that the US central bank will announce a cut in the purchasing program. The tone of the statement along with what Powell says later is expected to generate movement, as well as the end of the event.
Next week it will be the turn of the Bank of Mexico. A sharp rise in US benchmark rates, coupled with a weak Mexican peso could set the stage for further rate hikes from Banxico.
USD / MXN points to recent highs
The USD / MXN advance shows that Tuesday’s pullback was just a correction. Although to enable more you go up the crossing must break 20.90; then it will quickly have an important psychological resistance at 21.00. A close above this level would point to more rises, or a consolidation at higher levels.
In case of not being able to with 20.90 again, the USD / MXN would be expected to remain in a range, possibly between 20.90 and 20.70. Below 20.65, the bottom of the range would become 20.45 / 50.
Technical levels
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