USD/MXN reverses after hitting 7-week highs
- USD/MXN hits monthly high at 19.46 and erases gains.
- MXN peso remains under pressure, recovers some ground as Mexican yields retreat modestly from multi-year highs.
The Mexican peso erased daily losses against the US Dollar during the last hours and recently hit a fresh daily high. Previously, dropped to the lowest since September. Some improvement in risk sentiment helped the peso.
USD/MXN rose earlier today to 19.46, the strongest since September 5. Afterward lost strength and pulled back. As or writing was trading at daily lows at 19.33, slightly below Monday’s close. The peso is about to post the first daily gain after losing ground during the previous four trading days.
The pair rose more than 3% in a week. It climbed from 18.75 to 19.45 before pulling back modestly today. The rally was boosted by a weaker Mexican peso affected by the outlook downgrade of Pemex (state oil company), the migrant caravan, higher Mexican bond yields and the referendum on the future airport. Also the greenback remains resilient on the back of Federal Reserve policy expectations and some risk aversion.
Technical outlook
Despite the recent bearish correction, USD/MXN holds a bullish tone. As long as it remains on top of 19.20, any slide should be considered as a correction. If price break under 19.20, the Mexican peso could recover further. To the upside, the immediate resistance is again the 19.40 area: a consolidation on top would expose 19.50 and above, attention would turn to September intraday highs located at 19.65/70.