- The Mexican peso continues to retreat from two-week highs.
- Rise in Treasury bond yields put pressure on emerging markets.
- USD/MXN bounces from 19.80, finds resistance at 20.00 area.
USD/MXN is rising for the second day in a row, extending the rebound from the 19.80 area, the lowest level in two and a half weeks. The pair reached as high as 20.02 on Tuesday and then pulled back slightly. After the opening of Wall Street it operates around 19.96.
Emerging market currencies are seeing mixed results. Fears over rising yields, particularly those on the US Treasury, are weighing on demand for emerging market currencies. The 10-year bond yields 3.22%, after moving away from the daily maximum.
On the plus side for riskier assets, rising equity markets is a positive factor. The Dow Jones rises 1.21% and the Nasdaq 0.70%, reaching new highs in days. If the rises on Wall Street continue, the peso could be favored.
Technical indicators do not give clear signals. On the daily chart they still favor the bearish scenario, but not as strongly. If it manages to remain below 20.00 and 19.95, where the 20-day moving average is, the Mexican peso could continue with a bias in its favor.
Next support is seen at 19.80 and below 19.70 appears again, which is the last great defense for a new visit to the 19.50 zone. In the opposite direction, a rally above 20.00 could support the dollar for an extension of the bounce towards the 200-day moving average of 20.19.
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
