- The dollar rises modestly on Wednesday.
- Emerging market currencies with mixed results.
- USD/MXN bullish in the very short term, but limited.
USD/MXN reached as high as 19.68 on Wednesday, reaching the highest since last Thursday, but then pulled back and returned to the 19.60 area. The pair maintains a bullish bias in the very short term, although the dominant trend remains bearish.
The dollar moves with a slight rise, in a context of certain calm in the financial markets. Traders are awaiting US inflation data on Friday and tomorrow’s meeting of the European Central Bank (ECB). The Federal Reserve will meet next week.
Stock markets are trading slightly lower, which plays against currencies such as the Mexican peso. In addition, Treasury bond yields are rising. The 10-year rate is at 3.01% and the 30-year rate at 3.16%.
The changes in growth projections from the OECD and the World Bank reflect current concerns, as they cut estimates for this year and next throughout the world. In the case of Mexico, the World Bank sees growth of 1.7% against the previous estimate of 2.1% in April.
Data released on Tuesday from US foreign trade showed that imports of Mexico they rank second with a 14.2% share, very close to China’s 15.3%.
Bearish overall, bullish in the very short term
The USD/MXN maintains a bullish bias in the very short term. The dollar needs to firm up above 19.60 to enable a test of the area around 19.70, which is the key resistance to break.
The failure for now to hold above 19.60 is a sign of difficulties on the upside. Around 19.55 there is a very short-term bullish line that, if it gives way, would take strength from the dollar by exposing 19.50.
In general terms, the dominant trend remains down. The Mexican peso needs to confirm the break of 19.50 to clear the way for more gains. For now, the USD/MXN seems to be consolidating the May drop, moving between 19.50 and 19.70.
Technical levels
Source: Fx Street
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