- The dollar rises on all fronts in the context of risk aversion.
- Drop in commodity prices impacts the Mexican peso.
- USD/MXN hits as high as 20.48 and then trims gains, though still under upward pressure.
USD/MXN is rising again on Monday, reaching as high as 20.48 in European hours, the highest level since March 18. In the last two hours it has started to pull back and is trading ahead of the American session at 20.28.
The advance of the USD/MXN had as its main factor the rise of the dollar throughout the market. Along with the yen, the greenback is one of the best performers driven by the fall in equity markets.
European markets fall 1.25% on average and Wall Street futures point to a negative opening with losses of around 0.50%. In the last hour, stock markets and futures cut losses, helping the Mexican peso cut losses.
Despite moving away from the highs, the short-term bias for the USD/MXN remains bullish. The rally stopped below the important area of ​​20.50, and in the area of ​​influence of the 200-day moving average (20.47). Should it break and assert above, further upside would be expected, with the next strong resistance at 20.70. In the opposite direction, a clear drop below 20.20 would ease the upside pressure.
From the fundamental point of view, If the declines in the equity and commodity markets persist, the USD/MXN will have room to continue rising. The possibility of further COVID restrictions on Chica, coupled with the impact of more aggressive monetary tightening by the Federal Reserve, are the factors weighing on markets on Monday.
Technical levels
Source: Fx Street
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