USD/MXN breaks below 18.80 to lowest since April
- Mexican peso rises versus US dollar amid a rally in Wall Street.
- USD/MXN about to test 2019 lows, likely to post the weakest close in eight months.
The USD/MXN reversed sharply from 19.00 and broke below 18.80, reaching the lowest level since April. A decline of the US dollar across the board pushed the pair to the downside.
After hitting 19.00 during the Asian session, USD/MXN turned to the downside as markets stabilized after falling sharply amid US-Iran tensions. The decline continued and accelerated after US President Trump’s speech.
The improvement in market sentiment boosted Wall Street’s stock indexes to record highs and sent crude oil and gold prices sharply lower. Emerging market currencies rose sharply versus the US dollar. Still, the US Dollar Index is up for the day, trading at weekly highs at 97.30, supported by the appreciation of the greenback versus main European currencies and the yen.
Technical outlook
If USD/MXN manages to post a daily close around current levels, a test of the 2019 low at 18.74 seems likely in the short-term. The next strong support might be located at 18.60.
A recovery above 18.80 would alleviate the bearish pressure. The key resistance above is seen at 19.00, the upper limit of the recent range and the 20-day moving average.