- Emerging market currencies continue to have a difficult outlook due to general caution.
- Fears about a global recession and interest rate hikes continue to leave the outlook cloudy.
- USD/MXN remains above 20.25, with resistance at 20.45.
USD/MXN is trading flat on Monday around 20.25/30, maintaining a short-term bullish bias, after last week’s strong rally. The cautious climate in financial markets continues to weaken demand for emerging market assets. The dollar on Monday shows a slight fall, in a day of low volume as a result of the US holiday.
Technically the bias is to the upside in USD/MXN, after returning around 20.25. A return below 20.10, (20 day moving average) could turn the bias to neutral. To the upside, the next key resistance is at 20.45, which contained the rallies last week. A close above would point to more upside.
Record remittance income
In Mexico, the key data will be published on Thursday with June inflation, which will be key for expectations about the Bank of Mexico. The annual rate could have been closer to 8%. An interesting fact is that in May, income to Mexico from remittances reached 5,712 million dollars, a record figure for a month.
In the US, the calendar ahead shows the minutes of the last Fed meeting on Wednesday, the ADP report on Thursday and the official employment report.
Technical levels
Source: Fx Street
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