- Cautious climate in equity markets weighs on emerging market currencies.
- Mexican peso cuts 30-hour range and breaks higher.
- Key resistance is located at 20.20/25: close above would enable more rally.
USD/MXN is rising on Tuesday on a cautious climate in financial markets, with the dollar firmer. The pair climbed from levels below 19.95 to 20.09, the highest since Friday.
Following the resumption of trading after the US holiday on Monday, stocks on Wall Street turned lower. The price of oil loses more than 3% and other raw materials also fall.
The advance cut with more than a day of trading in the range between 20.02 and 19.92. In a broader view, USD/MXN continues to move without being able to overcome the strong barrier of 20.20/25 and finding support above 19.80.
Between Mexican inflation and the Fed
On Thursday in Mexico the inflation figures for August will be known, which is expected to show an increase in the annual rate from 8.15% to 8.6%. This would continue to put pressure on the Bank of Mexico to raise interest rates even more.
The monetary adjustment of the Federal Reserve is another factor that puts pressure on Banxico. the fed I know estimates that the reference interest rate could rise by 75 points. This will depend on the next economic data.
Technical levels
Source: Fx Street
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