- The dollar gains momentum on risk aversion and higher yields.
- USD/MXN tests 20.15, could go towards 20.25.
- On Friday the employment report in the US and inflation data in Mexico.
The USD/MXN is rising for the second day in a row, driven by the rise in the dollar and the fall in stocks. The pair is now trading at 20.14, in the area of ​​daily highs.
If it continues to rise, the USD/MXN faces immediate resistance at 20.16, which if asserted above would leave him on his way to try 20.25. A close above 20.25 would be a positive sign for the dollar, exposing next resistance at 20.45. If it is not possible with 20.15 then there could be a retracement, first to the 20-day moving average at 20.06. Supports are then seen at 20.00, 19.92 and the strong barrier at 19.80.
Caution before key data
Friday will be a day of key data. In the US, the official employment report for September will be published with non-agricultural payrolls (consensus 250,000) and the unemployment rate (3.6%). While in Mexico the inflation figures for September (8.75% annual) will be known.
On Thursday it was learned that the initial requests for unemployment benefits had risen last week to a maximum in five weeks, breaking a downward trend that had been going on since the beginning of August. Despite this, the dollar remained strong in the market, supported by the rise in Treasury bond yields. The 10-year bond yields 3.79%, the highest since Monday.
The rises in the dollar on Thursday are widespread and include emerging market currencies. The cautious climate in equity markets offers natural support to the dollar. The Dow Jones is down 0.63% and the Nasdaq is down 0.42%.
Technical levels
Source: Fx Street
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