- The Mexican peso had a great performance in the market last week.
- The dollar loses strength due to a rise in stock markets and stability in Treasury bond yields.
- USD/MXN bearish in the short term, look towards 20.00.
USD/MXN erased Monday’s gains and returned to the 20.10 zone, showing that bearish pressures remain. The cross had bottomed earlier in the Asian session at 20.06, the lowest in a week and a half, after which it rebounded to 20.18.
The Mexican peso remains firm after being one of the best performing currencies last week throughout the world. The Bank of Mexico’s decision to raise rates by 50 basis points and the vote, which opens the door to a possible acceleration in the rate of hikes, gave support to the Mexican peso.
They also contributed to the decline of the USD/MXN, technical factors. The break of 20.25 and later of 20.20 added strength to the MXN. Now the support being tested is 20.08, a confirmation below would clear the way for 20.00.
In the opposite direction, now 20.25 is a relevant resistance and a return above it would take strength from the Mexican peso. Further up, the key area is 20.45, which has capped gains in the last two weeks. A close above 20.45 would enable a bullish extension with a possible target at 20.70.
On Monday the dollar is calm, before a pause in the turbulence in the financial markets and after the rally on Friday in the stock markets. If the recovery and calm persist, the Mexican peso could be strengthened.
Technical levels
Source: Fx Street
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