- The Mexican peso is affected by the bad weather in the markets.
- The dollar remains firm on risk aversion and rises in yields.
- USD/MXN still unable to confirm above 20.30.
USD/MXN is rising on Monday in another red session for equity markets around the world. The pair climbed to 20.39, the highest since May 3, and then fell back below 20.30. The upward pressure stems from the negative climate in stock markets around the world that is weighing on emerging market currencies.
On Wall Street, the dow jones loses 1.03% and the Nasdaq 1.70%, which adds to the poor performance of last week. The global economic outlook, together with the general monetary adjustment plus the war in Ukraine and the restrictions in China due to COVID continue to weigh on the risk and mainly affects emerging market currencies on Monday, among which is the Mexican peso.
In Mexico The inflation reading for April was known, which showed a rise of 0.54%, slightly lower than expected. The annual rate went from 7.45% to 7.68% and is still far from the central bank’s target. Banxico will announce its monetary policy decision on Thursday and another hike of 50 basis points to 7% is expected. In the US, the key figure will be retail inflation to be published on Wednesday.
The USD/MXN is trading near 20.30 and if it asserts above, it would be poised for an extension to the upside. The next resistance is at 20.50 and then at 20.70. In the opposite direction, 20.25 has become an intraday support and below it remains 20.15, which is where the 20-day moving average is, before the low of the month at 19.99.
Technical levels
Source: Fx Street
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