- Mexican peso remains under pressure versus US Dollar on risk aversion and domestic concerns.
- USD/MXN again capped by 20.30, still holds a bullish bias.
The Mexican peso is falling against the US dollar at the beginning of the week, approaching to multi-month lows. The USD/MXN pair rose to 20.36, near last week highs but then pulled back, trimming gains. As of writing was hovering slightly below 20.30, headed toward the second highest daily close since June.
The move higher took place after a correction of USD/MXN on Friday, on the back comments from Mexican President-elect Lopez Obrador, who said he was not going to make changes to the fiscal, banking and economic regime in three years. But the recovery of the Mexican peso was short-lived.
On Monday, a stronger US Dollar across the board boosted the pair to the upside. The DXY reached the highest level in 17 months above 97.30 while equity prices in Wall Street tumbled, adding to the negative sentiment toward emerging markets assets.
On Thursday, the Bank of Mexico will meet. Some analysts expect a 25bp rate hike to 8.0%, the highest rate in a decade while other see Banxico on hold. The depreciation of the Mexican peso boosted forecast for a rate hike.
USD/MXN – Levels to watch
To the upside, resistance levels might be located at 20.40, followed by 20.50 (psychological) and 20.65. On the flip side, support could lie at 20.05, 19.90 and 19.70.
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