- The Mexican peso recovers but continues to face pressure due to a climate of caution and a strong dollar.
- USD / MXN within recent range, pressing up.
USD / MXN is declining modestly on Wednesday, trading around 20.70. By Tuesday it had climbed to 20.84, the highest level since Nov. 3. The current setback represents a relief, but not a change in the short-term outlook.
Looking at 20.85 and 21.00
The Short-term bullish bias is still in force for the USD / MXN, although it is close to the important resistance zone of 20.85, which yesterday contained the hikes. The dollar needs a daily close clearly above to target more gains, and a test at 21.00.
The current range between 20.90 and 20.45, has an intermediate support at 20.60. Below 20.60 a prolongation of the correction would be expected, towards 20.45. Further declines, they could find support at 20.30.
It’s the dollar
The The main reason behind the advance of the USD / MXN is the general rise of the dollar in the market. The greenback is favored by the good US economic data that is coupled with the rise in inflation. This context is leading to speculation that the Federal Reserve will have to adjust monetary policy earlier than expected.
Treasury yields continue to trend upward, adding pressure on emerging assets. The Mexican peso is having an average performance in the group of emerging market currencies these days.
Technical levels
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