USD / MXN rises modestly and tests 20.20

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  • Mexican peso with some weakness on Thursday.
  • Unemployment benefit claims rise in the US; inflation does not drop in Mexico.

USD / MXN is trading in positive territory on Thursday, continuing the bullish bias, but still below recent highs. The price is approaching 20.20, having found support at 20.10.

The rises occur in a context of decline in the stock markets after a strong rebound. Volatility is still present, which can contribute to fears and thus affect demand for emerging market currencies.

The dollar presents mixed results so far this Thursday, while the Mexican peso is among the worst performers, although showing a moderate decline.

In the US there was an unexpected rise in the initial requests for unemployment benefits to the highest in eight weeks. This contributed to some pessimism and pushed Treasury yields back.

A key piece of information was known in Mexico: the inflation rate for mid-July. The consumer price index showed a reading slightly higher than expected, standing at 5.75% (annual) in the first half of July, just above the 5.74% of the previous one. This indicates that inflation remains well above Banco de México’s target of 3%.

Technical overview

The bullish bias remains firm in USD / MXN. The price is finding resistance at the 200-day moving average that passes through 20.22. A close above would point to more rises, especially if it occurs with a break of 20.30, which is the next resistance. Now the key support to be 20.05. A drop below the latter will suggest more strength for the Mexican peso ahead.

Technical levels

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