USD/MXN retreats amid dollar sell-off, still remains above 20.00
- Mexican peso rises sharply against US dollar but stayed behind against other currencies.
- USD/MXN corrected lower but the trend still points to the upside.
The Mexican peso rose against the US dollar and recovered from yesterday’s losses but still remains sharply lower compared to the level it had a week ago.
The USD/MXN peaked yesterday at 20.47, the highest level since June following a report from Fitch warning that Mexican debt rating could be downgraded amid concerns on the incoming government policies. The outlook changed to negative after Andrés Manuel López Obrador canceled the ongoing construction of the new airport creating uncertainties about future investments.
From the top, USD/MXN pulled back, amid a slide of the US dollar across the board. The greenback tumbled on Thursday, having the worst performance in months and helped the pair moved lower. It bottomed during the US session at 20.04 and near the end of the session was hovering around 20.10/15. The bearish correction found support above the psychological area of 20.00.
USD/MXN - Technical levels
To the downside, the key immediate support is seen at 20.00 followed by 19.90 and 19.65/70. To the upside, a recovery above 20.30 would signal a potential test of the weekly highs and the 20.50 area, a key barrier.
The main trend continues to point to the upside. Today’s slide should be considered as a corrective move. If the US dollar remains weak in the market, a consolidation of USD/MXN between the range 20.35/19.85 could be seen in the coming days.