- Mexican peso dropped sharply after comments from Mexican president-elect.
- USD/MXN trimmed gains and moved back to 19.00.
The Mexican peso tumbled in the market and trimmed gains versus the US dollar in a few minutes following comments from president-elect Andrés Manuel Lopez Obrador (AMLO).
USD/MXN rose from 18.77 to 19.05 in a few minutes hitting the highest level since Monday. From the top, it pulled back modestly and it was trading at 18.95, marginally lower for the day but far from the lows. Before the recent move to the upside, the peso was significantly higher on the back of a global decline of the US Dollar. The greenback weakened after Fed’s Chairman Powell speech.
Mexican president-elect AMLO mentioned that the new NAFTA needs to reflect Mexican sovereignty and rights on oil. His comments created some concerns about the outcome of current negotiations that are taking place between US and Mexican officials.
Technical outlook
Again USD/MXN has been unable to hold above 19.00, showing some strengthen from the Mexican peso, but if it breaks and holds above the mentioned area, more gains seem likely. Potential targets could be seen at 19.15 and 19.30. On the flip side, the peso would gain momentum with a slide under 18.80. However, the key short-term support is the 18.70 zone and a break lower would negate the current bullish bias.
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